Huge energy subsidies fuel China steel export-study

Massive government energy subsidies have fueled China’s transformation into the world’s largest producer and exporter of steel, according to a new study released on Tuesday.

“In 2007, energy subsidies to Chinese steel are estimated at approximately $15.7 billion, showing a 3,800 percent increase since 2000,” the study prepared for Alliance for American Manufacturing, a U.S. industry group, said.
The report provides new ammunition for U.S. steel companies that complain Chinese government subsidies are responsible for a surge in steel imports from that country. Imports totaled 5.35 million tons in 2006, more than double the 2005 level.

It also could lay the groundwork for a possible case against China at the World Trade Organization for violating world trade rules on subsidies.

“The China steel industry in its current form is the creation of the Chinese government. It has benefited from massive direct and indirect subsidies, many of which violate the WTO’s subsidies agreement, China’s obligations under its WTO accession agreement, or both,” the study said.

Reuters