China to support steel exports as U.S. imposes hefty tariffs
By Ruby Lian and David Lawder
SHANGHAI/WASHINGTON (Reuters) - China said it would persist with controversial tax rebates to steel exporters to support the sector's painful restructuring, defying a United States move to impose punitive import duties on Chinese steel products.
A worldwide steel glut has become a major trade irritant, with China under fire from global rivals who say it is dumping cheap exports after a slowdown in demand at home.
In a marked escalation of the spat, the United States on Tuesday said it would impose duties of more than 500 percent on Chinese cold-rolled flat steel, widely used for car body panels, appliances and in construction.
However, China's Ministry of Finance said it would "continue to implement a tax rebate policy on steel exports" as it tries to finance a costly capacity closure plan.
By far the world's largest steel producer, China plans to eliminate 100-150 million tonnes of annual production - more than the U.S. produces per year - over the next five years. The cabinet said central government-controlled firms will cut steel and coal production capacity by a tenth in 2016-17.
The finance ministry said China was making special funds available to curb overcapacity in both steel and coal and would reward local authorities for exceeding their targets and meeting them early.
The policy document, though dated May 10, was published just hours after the U.S. tariffs were announced. It is the latest policy announced by different departments including the Ministry of Human Resources and Social Security to push forward capacity cuts.