In the run-up to the G20 summit in Hangzhou on Sunday 4 and Monday 5 September, AEGIS Europe, an alliance of European manufacturing industries, issued a plea on Friday 2 September to the leaders of the world’s leading economies to take a stand against Chinese state-induced overcapacities and overproduction and to support the use of legally robust trade defence instruments to address dumping by Chinese producers across many sectors in global markets.
“China now makes and sells more manufactured goods than any other country in the world. However, the defining feature of its industry is state-subsidised overcapacity”, states AEGIS Europe, setting out a damning review of Chinese overcapacity: Chinese capacity in the solar sector is 1.3 times global demand and silicon capacities are more than twice global consumption; 60% of the production of China’s aluminium industry is loss-making; Chinese steel overcapacity is estimated to be 350 to 400 million tonnes, more than double the total EU annual steel demand of 150 million tonnes.
Chinese state-financed overproduction and overcapacities are generating “corrosive distortions” in the global market, undermining companies and destroying jobs around the world, AEGIS Europe argues. “The one big state-planned economy of the world is leading global market economies on a goose chase”, it rails.
Welcoming the call from EU leaders – the presidents of the European Council, Donald Tusk, and the Commission, Jean-Claude Juncker – for “urgent and effective action” from the G20 to cut overcapacity in the steel and other sectors (see EUROPE 11612), AEGIS Europe calls on the G20 leaders to thoroughly assess the impact of state-subsidised overcapacities on global markets and endorse sustainable and fair trade, which is made secure by effective trade defence instruments (TDIs).
The EU has an established set of five “tests” to determine whether a country is operating as a market economy. These criteria must remain at the heart of any TDI methodology, says AEGIS Europe: China has only passed one of these tests, it states.
“So long as China does not follow the rules of international free trade and continues to operate along non-market economy lines, with policy planning that favours distortions and overcapacities, the EU and its G20 partners must defend themselves through all legal means available”, says AEGIS Europe. (Original version in French by Emmanuel Hagry)