With tension between China and the US far from tapering off anytime soon, it is in trade and economic areas where Beijing’s activities appear to have further hit panic button in Washington DC as Secretary of State Antony Blinken, during his April 24-26 visit to East Asian country, raised his concern on dumping of Chinese products, including steel and Aluminium in the American market.
US State Department Spokesperson Matthew Miller was quoted by Reuters as saying that at a meeting with Chinese top officials, Blinken raised “concerns” about China’s trade policies and non-economic practices. This is the second time in a month when a senior official of the Joe Biden administration put the issue-related to dumping- on the table before Chinese authorities.
Earlier, US Treasury Secretary Janet Yellen, during her official trip to China from April 3 to 9, raised concern on Chinese overproduction and flooding of the American market with highly subsidized products. The US wants to rein in surging exports from China at any cost as it fears they are threatening American jobs and businesses.On April 17, worried by China’s continued dumping of steel and aluminium in the American market, President Joe Biden called on the US Trade Representative (USTR) to consider tripling the tariff on supply of these products from China.
It was the first time when the US under the Biden administration proposed imposition of hefty tariffs on imports of Chinese steel and aluminium into the American market. In fact, the Joe administration has largely continued with all the tariffs initially levied under the Donald Trump administration against Chinese imports in the US. Presently, the average tariff in the US on certain steel and aluminium products is 7.5%.
“American workers in the steel and aluminium industries face a significant challenge from Chinese exports of steel and aluminium which are among the most emission-intensive products in the world. China’s overcapacity and non-market investments in the steel and aluminium industries mean that high-quality US products have to compete with artificially low-priced alternatives produced with higher carbon emissions,” the White House said on China’s unfair practices in a statement released on April 17. In March 2024, China’s steel exports to the US jumped 25.3% (to 9.89 million) compared to March 2023, while its exports of unwrought aluminium and aluminium products to the US totalled around 510,000 tons—a year-on-year increase of 3.1%, data from China’s General Administration of Customs showed.
This development suggests that China has reopened its old playbook and has chosen to export its way out of an economic downturn, which is not a good practice as an oversupply of commodities leads to a reduction in prices and uncertainty for industries in other countries, analysts say.According to the Council on Foreign Relations, an American think tank specializing in US foreign policy and international relations, China’s surplus in goods trade has more than doubled since the pandemic. In 2019, the East Asian country exported an estimated $400 billion more in goods than it imported. In 2023, its exports ballooned to $900 billion and this year, they are expected to soar beyond $1 trillion.
Despite this, China nonchalantly defends its approach in trade and commerce, saying those who say Beijing is dumping its products in the global market, are only justifying “protectionism.” “The notion that China’s overcapacity harms the global market is a complete fallacy. Those who spread that narrative to justify protectionism have nothing to gain from it and will only destabilize and disrupt industrial and supply chains,” China’s Foreign Ministry Spokesperson Lin Jian said.
This has, however, stoked tensions in the US and the European Union as they fear that China’s move could harm their plan to reduce their dependence on Beijing that they want to do by boosting local manufacturing and creating jobs, including through the Net-Zero Industry Act and the Inflation Reduction Act.
Yet China appears to be less concerned about the impact of flooding the international market with its cheap goods so far as it helps it in earning profits. China’s first quarter GDP rose 5.3%–growing by 1.6% from the previous quarter. Analysts see it as an unbalanced recovery and for this, they blame China which relies heavily on manufacturing and exports to checkmate downturn in its economy.
However, it is in the case of China’s ‘unfair, non-market policies and practices’ to dominate the shipbuilding industries that pot is boiling in the US and the world. Rattled by China’s ‘unreasonable and discriminatory acts, policies and practices’ five American labour unions, including steel representatives on March 12 filed a petition before the US Trade Representative (USTR) to probe the East Asian country’s acts in distorting global markets in the maritime, logistics and shipbuilding sectors.
“President Biden believes it is critical to understand China’s uniquely aggressive set of interventions in these sectors (maritime, logistics and shipbuilding), and to take actions that address distortions to the global market for commercial vessels, maritime shipping, and logistics that harm American workers and shipbuilders,” the White House said on April 17 after the US President gave approval to investigation into Beijing’s unfair shipbuilding practices by the USTR.
Financial Times said though the case relates to the shipbuilding industry, it will have ‘dramatic global implications’. “Not only does it have the potential to reignite the US-China trade conflict, but it will also increase the focus on China’s growing military might and the massive commercial shipping industry that underpins it,” Financial Times said. Last year, continuing its dominance in the shipbuilding sector, China produced more than 1,000 vessels, while America produced just 10, the British daily business newspaper said. What is, however, worrying experts the most is that Chinese companies, which are state-backed companies, have become leaders in financing, building, operating, and owning port terminals around the globe.
Writing an article in 2022 in International Security, a peer-reviewed US journal, Isaac B Kardon, an Assistant Professor at the China Maritime Studies Institute at the US Naval War College and Wendy Leutert, an Assistant Professor at Indiana University said Chinese companies own or operate one or more terminals at 96 foreign ports, 36 of which are among the world’s top one hundred terminals.
This level of control over logistics across the world, gives China clear economic and security advantages and this is what worries strategic thinkers across the world—all this when tension between China and the US is increasing owing to Beijing’s aggressive military activity in the Indo-Pacific region.