US warns China of steel overproduction

The US Treasury Secretary has called on China to cut excess steel production capacity as it distorts global markets. Jack Liu addressed Beijing ahead of the annual meeting between the United States and China to discuss trade and security issues.

China is the world's largest steel producer and has been accused by the US of selling products at below market prices. Liu said the overcapacity could have a "corrupting" effect on the Chinese economy.

US officials will discuss the issue with their Chinese counterparts at the annual US-China meeting to discuss strategic and economic relations. “Overcapacity ultimately corrodes the efficiency of the economy,” Liu said.

Liu also said that overcapacity is not only a domestic issue for China, which produces more than half of the world's steel. This literally has a huge impact on the global steel and aluminum markets, and “we are seeing distortions in global markets due to overcapacity,” he said.

Steelmakers in Europe are worried about the low cost of Chinese imports flooding their markets and say this has caused prices to fall. Earlier this year, India's Tata Steel announced its intention to sell its loss-making UK company, putting thousands of jobs at risk. UK increased imports of Chinese steel from 303,000 tons in 2013 to 687,000 tons in 2014