In 2014, the export of China's steel products increased sharply: from January to November 2014, the export of steel products was 83.61 million tons, and the export volume was 63.393 billion US dollars, a year-on-year increase of 46.8% and 31.4% respectively. It is estimated that the annual steel export exceeded 90 million tons. The problem is not big (see Figure 1).
Reasons for the rapid growth of China's steel product exports
The rapid growth of China's steel product exports is due to objective economic laws.
China has already been the number one steel industry with more than half of the world's production. In 2013, China's crude steel output was 7.7904 billion tons, and steel output was 1,067.6 million tons. Since 2011, China's steel production capacity has begun to show a significant surplus relative to the domestic market. Steel, electrical steel, etc., can not be outside, resulting in the domestic market price is significantly lower than overseas, the current export price is higher than the domestic sales price of 1,500 yuan / ton.
At the same time, the fierce competition in the domestic market over the years has tempered the advantages of Chinese steel companies in terms of supply efficiency and quality. Haresh Melwani, head of HLNGoa, a large Indian ore supplier, cited such a case: Three years ago, a wind power plant in India purchased steel in China, and the other party could only deliver it after 12 months; Suppliers, Chinese manufacturers only supply in 4 months. At that time, there were rumors in India that the quality of Chinese steel was not good. In fact, the quality was very good. The project was operated for 3 years and there was no quality problem with the steel. Chinese manufacturers have the incentive to expand exports to ensure revenue, and overseas buyers have the need to find efficient, high-quality and low-cost suppliers, and the two sides hit it off.
However, Mu Xiu Yulin, the wind will destroy, like the previous "Made in China" industry, today's Chinese steel industry has become a victim of international trade protectionism. Since 2013, countries have launched “double opposition†(anti-dumping and countervailing) on ​​Chinese steel products.
All these trade protection measures not only damage the rights and interests of China's steel industry, but also harm the interests of the downstream industries of the importing countries and the entire national economy without exception; these measures do not protect the industries that are struggling, but lie on trade protection measures. The vested interest groups that are inactive and inactive, and even the serious defects of the judicial and administrative systems of the importing countries. This is particularly prominent in India.
India's own institutional flaws
First of all, in general, the countries with the most restrictive measures for Chinese steel products are not the countries with the most imports, because 54% of China's steel exports in the first nine months of 2014 flow to ASEAN, South Korea and the Middle East, but China is restricted. Steel is basically Europe, America and India; therefore, the so-called "industry damage" in these countries is questionable.
Moreover, the growth of China's exports of Indian steel products in 2014 was largely due to the recovery after the continuous sharp decline in the previous two years, and the export volume has not yet reached the 2011 level. Although India has the need to protect local industries, it is also necessary to impose restrictions on such restorative growth.
From the perspective of the entire national economy, India has always faced the contradiction between “accelerating economic growth†and “maintaining trade balance†in the objectives of the economic growth plan.
In general, the acceleration of economic growth in developing countries usually leads to an increase in demand for imported equipment, raw materials, basic products, energy, and consumer goods, which in turn leads to a deterioration in trade balance; in India, where manufacturing is underdeveloped and lacks international competitiveness, this The effect is quite obvious. At this time, if we want to curb the deterioration of the trade balance, it will hinder economic growth; to ensure economic growth, we will have to bear the deterioration of the trade balance.
In the Indian steel industry, this contradiction is particularly significant: India is a country with a serious shortage of infrastructure and basic industries. The supply and demand gap in the steel industry is quite prominent. For many years, it has relied on imports to make up for the supply gap. In terms of 10 million tons, special steel, silicon steel, and rail steel are all imported. In order to accelerate the development of India's economy, infrastructure construction must be accelerated. The Indian steel industry, regardless of production or quality, can not meet domestic demand. Accelerating infrastructure construction will inevitably lead to further rapid growth of steel imports.
Since Modi became the prime minister of India, he has promoted the “Made in India†program, and has launched an ambitious infrastructure construction plan, which is expected to stimulate the weak Indian steel market in recent years. In 2013, demand for steel in India increased by 1.8%. The worldsteel is expected to grow by 3.4% to 76.2 million tons in 2014 and is expected to grow further by 6% in 2015. China’s steel exports to India are growing in this context.
Faced with the contradiction between "accelerating economic growth" and "maintaining trade balance", it is for the temporary interests of the steel industry, but it does not hesitate to drag down the overall situation of the national economy, or to face the reality and avoid the opportunity to miss economic growth. Neutral objective and wise It is not difficult to make a choice.
Considering the deep institutional defects, it is difficult for India's steel industry capacity to expand rapidly to meet domestic demand. Even its existing production capacity will be artificially restricted due to defects in administrative and judicial systems, and it will not be able to operate at full capacity, limiting imports of steel to India. The overall interests of the national economy are the best policy. Because it sacrificed the interests of the downstream industry and the opportunity of rapid development of the national economy, it could not change the leap-forward growth of the Indian steel industry.
Due to issues such as private ownership of the land and serious bureaucracy, India’s business environment is quite bad. It ranks quite well on the World Bank’s “Business Convenience†rankings, and fell two more in the latest rankings in 2014, at 189. Ranked 142th in the economy. It is in this business environment that many large steel projects in India have been blocked for a long time and even completely smashed:
In 2005, South Korea’s Posco and the Indian government signed a memorandum of understanding to build a 12-million-ton steel plant in Orissa, with the largest investment in foreign direct investment (FDI) in India’s history with a total investment of 12 billion U.S. dollars. project. As a result, after eight years of tossing, it has aroused the social contradictions of continuous and unreasonable mass retreats. The land acquisition work in Orissa has been stagnant, and Posco has to cancel the construction plan;
Arcelor-Mittal, the world's largest steel company, has also experienced “going to the city†in its boss's home country. In 2006, the Mittal Group signed an agreement with the Indian government to build a 10 million-ton steel mill. However, after seven years of tossing, only one candidate in Karnataka has roughly determined the land use. The coke and infrastructure required by the steel mills are not settled. The other two candidates are Orissa and Jharkhand. No one can be sure. Faced with this situation and this efficiency, Mittal had to announce the abandonment of the Indian construction plan in 2013.
The expansion of the Indian steel industry is difficult, and it is the existing capacity that has been built up. It is often disturbed by flying and cannot be operated at full capacity, and these disturbances often come from its administrative and judicial systems.
At present, due to the shortage of raw materials, the capacity utilization rate of the Indian steel industry is only 80%; but this shortage of raw materials is entirely artificially manufactured by the Indian judicial system.
Because India is originally a big iron ore resource country, iron ore exports have been second only to Australia and Brazil for many years, and there is no shortage of raw materials. But since 2010, the Supreme Court of India has promulgated a large-scale implementation of iron ore mining and export bans in the name of “combating illegal mining†and “anti-corruptionâ€, ending the golden age of the Indian iron ore industry, leading to Indian iron ore production and Exports suddenly and steadily declined during the “bull marketâ€. Almost all steel companies in All India suffered unexpected and significant impacts. Production was limited due to insufficient raw materials, and iron ore costs rose from the ground up.
In the case of strong demand in the domestic market, the capacity utilization rate of the Indian steel industry has been hovering around 80% for several consecutive years. Some key enterprises have been hit harder, and almost all of the backbone steel companies in India have had to suspend or cancel investment expansion plans. Worst of all, although Prime Minister Modi is full of great plans to revitalize “Made in Indiaâ€, India’s federal system has determined that it is difficult for him to settle the land acquisition disputes faced by enterprise expansion and infrastructure. The independent judicial system determines that he is difficult to coordinate. The decision of the judicial system.
In response to the situation that China's steel exports have caused opposition from India and other countries, China Steel Association has warned steel companies earlier that the export of a large number of low-value-added products will inevitably lead to increased trade friction. It is understood that China Steel Association is considering canceling the export tax rebate for alloy steel.
The author believes that since the Indian steel industry is unable to meet its domestic demand, since India's domestic steel supply and demand gap is caused by its institutional defects, then, why should China's steel industry be required to pay the bill? Our steel export tax rebate was in full compliance with the WTO rules. Our steel industry is no longer the negative image of the original "two high and one capital" industry. Is it really necessary to self-restrict?
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