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Anti-dumping duties are not a long term solution

28 September 2015
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The Chinese Ministry of Commerce stated that anti-dumping duties are not a long term solution for cheap products coming from China. These are currently very popular measures which some countries use trying to protect their economies, but they are by definition limited in time and space. They are used to restrain the consequences, rather than trying to find a solution to the problem.

The Chinese Ministry agrees that the market is simply overloaded with large amounts of materials and products. As the domestic demand decreased, Chinese steelmakers had to find alternative ways to survive, and that meant the export to foreign markets. They managed it with record low prices, and only in the first 8 months of this year they increased sales in foreign markets by 26.5%!

 

Excessive production capacity have led to drastic surplus on the world market. Oversupply plunged the prices of steel and steel products to the level where Chinese manufacturers are accused to sell their goods below the real cost of production.

 

Are the accusations justified or the Chinese production is really so much cheaper?
Low cost of Chinese labor, large and efficient production facilities, cheap raw materials, unrestricted environmental policy, governement support - these are all factors that can really provide Chinese steelmakers very low cost of production per tonne of goods.

Shen Danyang, spokesman of the Chinese Ministry of Commerce told the media that there is no basis for the accusation that the Chinese products are sold below justified market price. Among other things he said: "Everyone is blindly repeating that China sells at dumping prices. These are unjustified and unfounded accusations!" He pointed out that prices of Chinese products only reflect the global collapse in prices of basic raw materials. He believes that the current overload of market by Chinese products is a common problem that occurs during the restructuring and adjustment of the world market, and that legal limitations imposed by other countries will not help to solve the problem.

 

China Iron and Steel Association (CISA) warned domestic steel producers that increasingly popular reliance on foreign markets is not sustainable in the longer term. It advises to introduce wiser politics of export prices because of increasing tensions in foreign markets.

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