Seven New Dumping Investigations, Most Since 2003
Actions by the Chinese government to subsidize failed corporations led to seven new “dumping” investigations in the first quarter. It’s the most since 2003.
US Steel is one of the companies screaming loudly.
In effect, China just served Donald Trump his primary campaign issue on a silver platter.
Is it remotely possible China would rather have Trump than Hillary as US president or are China’s actions simply “Trump Luck”?
The Wall Street Journal reports China Continues to Prop Up Its Ailing Factories, Adding to Global Glut.
China is doubling down on efforts to keep unprofitable factories afloat despite for years pledging to curb excess capacity, adding to a glut of basic materials flooding the global economy.
The country’s overproduction of steel, aluminum, diesel and other industrial goods has driven down prices and crippled competitors, leading to thousands of lost jobs in the U.S. and elsewhere.
According to a Wall Street Journal analysis of Chinese public companies, Chinese government support includes billions of dollars in cash assistance, subsidized electricity and other benefits to companies. Recipients include steelmakers, coal miners, solar-panel manufacturers, and other producers of other goods including copper and chemicals.
One beneficiary, Aluminum Corp. o f China, or Chalco, said in October one of its units would shut down a roughly 500,000-ton-per-year smelter in the far-western Gansu region as it struggled to make profits. Executives prepped for thousands of layoffs.
Then Gansu officials slashed the plant’s electricity bill by 30%, employees say, and the factory was saved.
In Europe, workers have joined protests against Chinese steel imports. Australia has investigated dumping of products including solar panels and steel and India has raised import taxes on steel after a surge of cheap Chinese goods.
The U.S. launched seven new investigations into alleged dumping or government subsidies involving Chinese goods in the first three months of this year, more than the same period of any other year dating back to at least 2003, government data show.
A 63-page “investigation initiation checklist,” filed last year by U.S. Steel Corp., Nucor Corp. and the United Steelworkers union to demand import tariffs on rolled steel, found 44 separate subsidy programs, including seven that give Chinese steelmakers cheap or free land, iron ore, coal, and power; eight that offer discount loans; 15 tax breaks; and 11 programs that give companies money directly.
China’s aluminum production, meanwhile, rose to 32 million tons in 2015, double the level in 2005. Exports soared to 6.7 million tons from 2.6 million during the same period, helping push global prices down 40% in the past five years. The number of smelters in the U.S. has fallen to four from 23 in 2000, destroying thousands of jobs.
Tensions over lost jobs reflect wider frustrations that China hasn’t lived up to all the promises it made when it joined the World Trade Organization in 2001.
According to data collected by the WTO, China accounted for around 25% of all anti-dumping measures reported between 1995 and 2014, more than any other nation. The U.S. was the target in about 5% of measures, the data show.
Exports and Subsidies Soar
On Purpose or Trump Luck?
China knows full well this will add fuel to the Trump campaign.
It’s remotely possible China prefers Trump to Hillary. If so, this was a good way to go about things.
However, it’s far more likely that China is acting to stem internal unrest and stave off another leg down in its stock market.
For Trump, it simply doesn’t matter. Either way, this is a savory treat, served right on time.
Mike “Mish” Shedlock
Chastise China for bringing us lower consumer prices and deflation. The USA and EU would never subsidize or bailout industries, in contrast to China -not! My amnesia. There was the 2008/9 USA bailout of several automobile companies, automobile supply manufacturers, numerous banks of all shapes and sizes, General Electric (industrial and capital goods), to name but a few. USA and EU agricultural subsidies are legendary: cotton, sugar, corn, etc.
So, should we bash bailouts and subsidies in general, or just bailouts and subsidies by China? What is Trump going to say? Construct future Trump Towers with higher-priced steel, or start a chain of raised construction costs that will mean less building and fewer construction jobs? No job outsourcing issue here.
Perhaps with the higher minimum wage, there will be an equally strong populist movement in the USA demanding higher prices for all consumer goods at Walmart et al. to promote inflation, prevent saving (money hoarding), and god knows what else. Considering the USA banned Chinese immigration from about the 1880s and actively deported Chinese through World War II, as cheap Chinese labor like that used to build the transcontinental railroads was no longer needed, China bashing is very retro and barbaric.
The difference is Chinese have extreme overcapacity. If they weren’t dumping all the excess production onto the world market, no one would complain about subsidies to money losing industries.
Probably yes…..
Isn’t this the first time since 2003 that world economic demand as been this low?
A new low would bring on more dumping!!!!!
It’s only currency manipulation and dumping when other countries do it. When America does it it is for “competitive advantage”.
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Exactly the US did not bail out the US auto industry..
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Cash for Clunkers helped the lower and middle class because
all the good used cars were crushed and they had to go into debt for transportation.
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.The US does not currently subsidize Elon Musk and Tesla and others.
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Only the bad Chinese do these things because the Chinese taxpayer
are stupid the US taxpayer are smart.
Yup.
Next time I see some Chinaman loitering around offering to pay off my Aluminum and Steel F150, and pay it’s fuel tab going forward, I’m calling Trump on him!
“It’s remotely possible China prefers Trump to Hillary.”
Remotely? I don’t see why China wouldn’t prefer Trump to Hillary. Trump wants to lessen tensions with Russia, cut back on NATO (and probably other military commitments). US wars don’t do China any good – the US makes its own arms and the resources used represent what is not used to buy Chinese goods. So Trump says he’s going to put import duties on Chinese goods. But he also believes that making deals is an art.
Hillary, on the other hand, means more war. There are only few goons left in the world who think war is good and most of them are in Washington, DC.
China bought the Clintons years ago. (Does no one remember this?) Of course they would prefer Hillary. She has already been paid for.
The Donald would require a new investment. Not impossible of course, just the realization of the sunk costs with Hillary and the need for fresh capital for Trump.
Hillary would bring war. It was she who pushed the war with Libya as Secretary of State, she voted for Iraq II, and her ‘husband’ made war on Serbia – which included the bombing of the Chinese embassy there. It’s true that China bought Clinton but that was 20 years ago.
Hillary grew up in a Chicago suburb. In Chicago (and Illinois) they say “an honest politician is one that, once they are bought, they stay bought”. I would not count on the Clintons to even rise to that level of “honesty”.
Yeah, doesn’t anyone remember China donating to Bill’s campaign, and all those $300K nights in the Lincoln bedroom and coffee with the president in the morning when the Clintons were running the White House as a B&B? Also, last I heard, Trump was going to slap some major tariff on Chinese imports.
I don’t see how anyone can conclude China would prefer Trump to Hilly….
You can’t buy a Clinton. Just as with blackmailers, the more you pay, the more they’ll ask for next time.
Besides, she’s not exactly the brightest thing in the world. And has pretty much lived her whole life in a Washington where “foreign policy expert,” has meant a Straussian neocon. So guess which group her advisors will be drawn from…..
The Chinese economy is in utter collapse with no support save manipulation of government economic data, devaluation of the Yuan, capital controls, sword waving in the South China Sea, a ten million banker purge, a hundred ghost city conflagration, plus closed borders and a ten year quiet time.
China can care less what we think.
China, just like the socialists in America, REJECTS Trump as an aberration and not a realistic possibility. He is so contrary to their interests they simply assume that he has no chance of becoming a true threat. Surely rational minded socialist principled individuals will reject him, regardless of how much THEIR actions prove him out.
They have always relied on their indoctrination to reject their obvious failings as unfortunate consequences of their lack of ABSOLUTE control. China clings to this control doctrine to their collapse and will never see it coming as after all, how can it fail if they are in control. At most, they will never blame the system or ideology, finding on blame with the implementers, swiftly disposing of them with NEW leadership, even more enlightened than the last. Socialists in America will do the same.
We see this in Bernie as leftist policies as imposed by a socialist administration fail, and the true believers reach for an even more “fundamentalist” leader. As socialism fails, the only cure is MORE socialism. A downward spiral of addictive delusion.
Of course the solution for failed government intervention is always more intervention. Consider healthcare, where the government began intervening long ago, in subtle ways, long before most or all of us were aware of it. They made it ok for certain plans to be tax deductible, making those full-benefit plans the defacto standards, while also hiding employees from the true full costs of the plans. From about 1960 on health costs have increased faster than inflation, until they finally reached the breaking point. Clearly the only answer is more government intervention.
As a Trump supporter, I am counting on Trump to embargo all Chinese goods from entering the US and repudiate all US debt held by the Chinese. Time for us to bring China to its knees and destroy them forever!
The U.S. could do both of those things and it wouldn’t mean diddly-squat to China. However, American manufacturers who are using cheap Chinese labor would scream bloody murder. Most American manufacturers, including Apple, would collapse. The stock market would collapse.
China already has what it wants: American manufacturing skill and access to world markets. China has happily gained that knowledge for worthless American debt. China is a communist country, they know debt is easily printed away. What really matters is human skill. And we gave that away to them.
The Chinese do not innovate, so they need continuing access to the latest technology and process engineering. So no, they are still dependent on the US….
The Chinese absolutely innovate. They are rapidly becoming the world’s largest producer of robotics, solar systems, specialty electronics, jet engines and many other areas mostly on their own engineering.
Much like Japan in the ’70s and ’80s, they have easily stolen and reverse engineered western technology and are moving it forward at incredible speeds. The U.S. is a dead place for innovation. The best we have is calling taxis with an app. We’ve lost the know-how to build things other than McMansions.
What John Sellers said. Chinese industry is becoming more competitive every year. While America’s is becoming more and ore moribund, and less and less efficient. As a direct, and entirely predictable, result of policies that render competitive production almost irrelevant as a profit driver. Compared to simply positioning oneself to siphon off a share of the money flood being printed and lent by Fed design.
Now, trust to be told, it seems like China is following America right down the “close our eyes and print” path, so who knows where it will end.
The Chinese hasn’t “stolen” their knowhow, any more than the US auto industry “stole” car building skills from the Germans, and American railways “stole” steam engine knowledge from the British. Or every dude that ever put together a wheel or pulley, “stole” it from whatever African or Assyrian first cut a disk out of a round tree trunk and affixed it to a cart.
Not even a Walt Disney or Amazon lawyer is stupid enough to genuinely believe, some Chinese kid in Inner Mongolia is stealing from anyone, by simply drawing a mouse on her classroom desk. Or that some Chinese wok store is stealing from anyone, by allowing their customers to order online with one click instead of two. Even those guys only pretend to believe, because absent faith in such idiocy, in order to make a living, they would have to do something productive with their useless little selves.
China will do what China always does; it looks after the interests of China, period! Essentially the same model as the US of A…..they don’t mouth off nearly as much.
“In effect, China just served Donald Trump his primary campaign issue on a silver platter.”
Meaning, of course, that the U.S. mainstream media won’t even cover it.
“Then Gansu officials slashed the plant’s electricity bill by 30%, employees say, and the factory was saved.”
LOL! We sure live in an era of delayed price discovery.
The coming age of discovery will be epic.
Tariffs or government subsidies,,,both are a form of protection from competition. Any way it’s sliced, the consumer ends up footing the bill.
But if it’s a consolation to China, Trump is a Keynesian, so there should be plenty of liquidity in the system to be transferred around.
All said, trade wars benefit no one.
China is losing control of its economy, and the mandate for the Communist Party’s authoritarian rule is predicated on good economic management. They can’t afford a Trump presidency bu they also cannot afford to put all of their market making activity on hold. I imagine there are some increasingly nervous apparatchiks in Beijing these days.
“I imagine there are some increasingly nervous apparatchiks in Beijing these days.”
Good for American Real Estate.
For what it’s worth, here’s a link to a chart that tracks various political polls. While you may not like the host, I have no reason to think that they aren’t presenting accurately what the polls reflect.
http://elections.huffingtonpost.com/pollster/2016-general-election-trump-vs-clinton
Interestingly, the “Undecided and Other” voters can make the difference in all of the polls with the exception of the CNN. And I would throw out Rasmussen as being decidedly Republican and CNN as being decidedly Wall Street kleptocracy. That leaves it pretty close.
Trump is the candidate of non-union working class whites. Unfortunately, they don’t make up a majority of voters anymore, just a majority of Republicans. I’m buckling in for four more years of CliBushObamaton.
I wasn’t presenting that link as something that is finished, but rather as a place that will be interesting to watch as the fall elections approach. There will be plenty of things between now and then that shift things one way or the other.
China seem quite fond with Trump. Why? I’m not sure I understand, perhaps his stupidity is lost in translation.