Chinese overcapacities affect more than just steel

The European Commission is considering a deal for the steel sector in exchange for granting China the coveted Market Economy Status (MES). According to European Aluminium, this approach ignores the enormous Chinese overcapacities in industries like aluminium and creates unfair distortions on the EU market.
Marcel Klinger,

Gerd Götz, Director General of European Aluminium stated, “The European Commission is playing a dangerous game. If this deal comes to pass the EU would essentially be sacrificing its remaining manufacturing industry to save one sector.”

The EU steel crisis has distracted the debate on China’s MES from the reality that other European industries such as the aluminium sector could face the same fate. If the EU grants China MES, it would put 80,000 European aluminium workers at risk of losing their jobs.

Götz emphasised, “A solution for one sector is no solution at all. Opening the door to China by granting MES – regardless of mitigating measures – would jeopardise the EU’s long-term industrial future.”

“As EU leaders are well aware and have repeatedly acknowledged, China is by no means a market economy,” Götz continued. “The Chinese government systematically subsidises strategic sectors like steel but also aluminium, solar panels and bicycles. State-supported aluminium smelters enable Chinese producers to sell at artificially low prices, to the detriment of EU companies that compete fairly and follow EU rules. The EU must therefore refrain from granting MES until it truly becomes a market economy.”

Chinese share of global primary aluminium production grew from around 10% to over 50% in just over a decade. China’s overcapacity in primary aluminium is five times the size of the EU’s entire production. China is also ramping up production across the value chain, including in semi-fabrication where exports to the EU increased by 21% in 2015 and by 17% in 2014.

“A proposal from the European Commission to grant MES to China would go against the advice of our trading partners in the US, who recently warned China that it had not done enough to qualify for MES, particularly in steel and aluminium. But more importantly, granting MES to China would go against the express mandate from the EU’s elected representatives in the European Parliament, who voted in May with an overwhelming majority on a Resolution against doing so,” Götz concluded.


Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.