China is going to force the country’s steel industry to cut production. The government wants to reduce the enormous steel surplus and restore the profitability of steel factories in the country.
The production cut was announced Wednesday during the Beijing National People’s Congress. However, the extent of the reduction in steel production was not disclosed.
China accounts for more than half of the world’s steel production but struggles with weak domestic demand due to problems in the construction sector. This has caused Chinese producers to look for customers elsewhere and dump cheap steel in Europe and other foreign markets.
As a result, Europe and other countries have taken steps to block Chinese exports of cheap steel.
Beijing has previously tried to cut steel production by tying it to carbon emissions targets, but annual output has remained stubbornly high. The collapse in profits for Chinese steelmakers and accusations that China is dumping its surpluses abroad are forcing the government to impose production cuts.
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