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China is keeping unprofitable factories afloat—contrary to its promise to curb excess capacity—spurring a global glut in industrial materials like steel, aluminum, diesel and others.
The subsequent rock-bottom prices have undercut competitors and led to job loss in the US—sparking a rise in trade disputes and protectionism, as trade has become one of the central issues in the 2016 US presidential race.
The Chinese government has given billions of dollars in cash, subsidies and benefits to companies including steelmakers and coal miners, along with copper and chemical producers, the Wall Street Journal reports.
In response, the US government launched seven new investigations during Q1 into dumping (selling products at a loss to gain market share) or government subsidies involving Chinese products, and has even put 266% preliminary import duties on Chinese cold-rolled steel.
China, on the other hand, denies dumping allegations and calls the US measures a form of protectionism, saying that it’s natural for complaints against the country to increase as it gets a larger share of global trade.
“As the largest trader in goods, it’s quite understandable for us to have so many” complaints, China’s commerce minister Gao Hucheng said recently. “We need to take it as it comes and live with it.” [WSJ]
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