China looks overseas in bid to slim down bloated steel sector
By David Stanway and Ruby Lian
BEIJING (Reuters) - As part of efforts to ease domestic steel and coal overcapacity, widely blamed for triggering a global industry crisis, China said it will do more to help its firms shift capacity overseas while keeping tight control on adding new capacity at home.
A joint statement issued by the central bank and several other government bodies on Thursday said China would "strengthen financing support for enterprises 'going out'", and use loans, export credits and project financing to encourage coal and steel businesses to build capacity abroad.
At the same time, it would strictly control credit available for new capacity additions in China.
It was unclear whether this signals government encouragement for more coal and steel exports from China, which has been widely blamed for dumping its excess steel on world markets, depressing prices and threatening thousands of jobs. Beijing says it has done what it can on overcapacity, and the criticism is "lazy protectionism."
Earlier this week, China and other major steel producers failed to agree on measures to tackle the overcapacity crisis, prompting the United States, European Union and others to call for urgent action.
"I am cautious about China's move to shift overcapacity overseas as this doesn't help, and just replaces exports," said Jiang Feitao, a steel researcher with the China Academy of Social Sciences.
Japan, another big steel producer, expressed concern over rising Chinese crude steel production and exports.
"We're not sure if the rise is because of a recovery in demand after Chinese New Year or resumptions of production by local mills in the face of higher steel prices. We need to closely look at China's output and exports in April," Koji Kakigi, chairman of the Japan Iron and Steel Federation, told a news conference in Tokyo. Continued...