LONDON – “China has committed to ensure that its central government policies and support do not target the net expansion of steel capacity; and to actively and appropriately wind down ‘zombie enterprises’ through a range of efforts, including restructuring and bankruptcy.”
This statement was made by U.S. Treasury Secretary Jack Lew earlier this month after high-level talks with Chinese officials in Beijing. There is plenty of devil in the missing detail, not least the scale of steel production overcapacity in China, but at least there seems to have been some meeting of minds.
Not so when it comes to China’s equally giant aluminum sector, however. The two sides failed to reach any sort of agreement other than to hold more talks, according to Lew. Producers in the rest of the world will remain beholden to China’s own aluminum dynamics, it seems.
That promises more pain ahead since all the signs are that the country’s smelters are once again ramping up production. There are many similarities between steel and aluminum when it comes to China’s influence on the rest of the world.
China is the world’s largest producer in both markets, accounting for 51.5 percent of global steel output and 54.4 percent of global primary aluminum output in April.
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