Top Biz News

Nation rolls out steel tax on US

By Ding Qingfen (China Daily)
Updated: 2009-12-11 07:51

China, the world's largest maker and consumer of steel products, fired back yesterday at the United States for its anti-dumping measures against Chinese steel exports, launching its own punitive taxes on steel from US as well as Russia.

The Ministry of Commerce said yesterday on its website that US and Russian steelmakers must pay anti-dumping duties as high as 25 percent beginning today. The US steel industry must also tack on a 12 percent tax when it exports its products to China.

The announcement comes after a series of damaging measures against Chinese steel exports launched by the US and Europe in recent months. China's provisional duties will hurt steel exporters from the US and Russia, said a Chinese steel expert.

"Investigations showed that steelmakers from the US and Russia had dumped flat-rolled electrical steel products in China," said the ministry's statement. "And American steelmakers also received a certain amount of subsidies from the US government. These moves have damaged the Chinese steel industry."

This is the first time that China has launched these specific anti-subsidy investigations. Flat-rolled electrical steels are high-end steel products, and they are mainly used for generators and power transformers.

Bloomberg said the move will "escalate a trade spat started in September."

But according to the Chinese World Trade Organization expert Zhou Shijian, the investigations and the ruling are both "in line with WTO rules."

"Chinese companies are correctly leveraging rules under the WTO framework to protect themselves. We needn't make a fuss about it," Zhou said.

Currently, few steel manufacturers in China, including Baosteel and Wuhan Iron & Steel, have the capability of making flat-rolled electrical steel products. About 50 percent of these products are imported from overseas, said Yu Liangui, vice-director of Mysteel Research Institute, a steel consultancy based in Shanghai.

According to the institute, US and Russia in 2008 exported a combined $602 million in steel products to China.

"The news will certainly cut down on imports, but benefit local steelmakers," Yu said.

Yesterday, Baoshan Iron & Steel, the listed unit of Baosteel, fell 1.3 percent to close at 9.12 yuan. Wuhan Iron & Steel gained 3 percent to 8.57 yuan. Both are listed on the Shanghai Stock Exchange and were not available for comment.

China has been the target of trade protectionism since late last year. According to the ministry's statistics, by the end of October, a total of 19 nations and regions have initiated investigations on 101 trade remedy cases against Chinese exports, involving a sales volume of $11.68 billion. The US and Europe are among them the most aggressive initiators.

This year, the US and the Europe have slapped tariffs and filed complaints against Chinese steel products to the WTO.

"Chinese steelmakers were deeply affected by the rulings and cases," Yu said.

The tire case initiated by the US in September has sparked a series of trade remedy investigations and rulings aimed at China.

But Zhou said "Chinese exporters are now using WTO rules well to fight against the trade protectionist measures."