China tells Angela Merkel it is not to blame for dumping steel

China recognises European concerns about overcapacity in its steel sector but believes it is a symptom of falling global demand, Chinese Premier Li Keqiang said yesterday.

Angela Merkel delivers her speech during the China-Germany Economic and Technological Cooperation Forum in Beijing. Picture: AFP/Getty Images

Speaking to visiting German Chancellor Angela Merkel, Li was eager to counter criticisms that a glut of Chinese steel exports is overwhelming producers in overseas markets including Germany and the US.

“We don’t deny there are many difficulties between Germany and China – for instance, the wide concern over China’s steel overcapacity,” Li said. “But steel overcapacity is a problem of the world, not only China. The world’s market is decreasing.”

The talks came amid concerns over trade and the ability of German companies and foreign non-governmental organizations to operate in China.

In talks with the US earlier this month, China promised to rein in production of steel, among bloated industries Washington and other trading partners complain are dumping exports too cheaply, hurting foreign competitors and threatening jobs.

China’s trading partners broadly believe Beijing has responded to a supply glut by encouraging low-priced exports.

Earlier this year China’s government announced plans to shrink state-owned steel and coal producers at a cost of millions of jobs. However, that project will take time, and the flood of low-cost steel has prompted protests by European steelworkers and was cited by Tata in its decision to sell its money-losing operations.

Washington has imposed anti-dumping tariffs and is investigating if Chinese mills are using stolen US technology. The EU has launched its own probe into possible dumping.

Despite plans for a 10 per cent reduction in steel production in coming years, China’s output actually rose 1.8 percent last month to 70.5 million tons.

Merkel’s visit comes amid growing worries among German companies over obstacles they face in doing business with China.

Li praised Merkel’s work in building bilateral relations and said government-to-government ties would help facilitate relations in various fields.

Merkel is the latest Western leader to express concerns over a new Chinese law governing NGOs, which places their management under the national police rather than the civil affairs ministry. Some of them say this could expose them to undue scrutiny and harm people-to-people exchanges.