EU forces China to cut steel sector

The EU has called on Beijing to cut excess capacity in the steel industry, promising new measures to support European producers facing a flood of Chinese imports.

Cecilia Malmström, EU trade commissioner, said she would otherwise open three new anti-dumping investigations on steel goods from China. Her letter to Beijing's Minister of Commerce Gao Hucheng indicates that more than a quarter of the workforce has been eliminated in the European steel industry since 2009.

Malmstrom added that the commission is inundated with complaints from EU manufacturers about the alleged unfair practices of Chinese manufacturers. “In the wake of this alarming trend, I urge you to take all necessary measures to curb excess steel capacity and other causes that exacerbate the situation,” she said in the letter.

Malmstrom's tone is likely a signal to Beijing, which is expected to be recognized as a market economy by the World Trade Organization later this year. Meanwhile, the EU is divided into granting China the status of a country with a market economy, so the UK is in favor of this decision, and Italy is categorically opposed.

While controversy rages, the EU continues to retaliate against China. Temporary duties were introduced last month on rebars used in the UK and Ireland to reinforce concrete structures. The Swedish commissioner welcomed the announcement of Li Keqiang, China's premier, when he announced that Beijing intends to cut steel production. However, he added that such commitments "should be translated into concrete results and as soon as possible."

Some diplomats and leaders are also pushing for special protection for some vulnerable sectors such as metals, footwear, ceramics and bicycles, even if China's market economy status is satisfied. The US is opposed to recognizing China as a market economy, arguing that the EU will be "unilaterally responsible" if it takes a decision this year.