November 19, 2017

China’s “unfair’ subsidies stoke trade war

For the past weeks, African Mining Brief has been reporting about the effects of low China domestic demand on African mining companies. Now, China’s response might set it on a collision course against other countries.

Reuters reports that the US has raised a concern with the World Trade Organisation that  China’s smelters, refiners and manufacturers might be enjoying an unfair subsidies and indulge in antidumping practices. This follows China’s decision to reduce export taxes on its goods – a move which producers in other countries fear will give Chinese producers an unfair advantage over them. Already, there is a sentiment that the falling Yuan, China’s currency, has given local traders an unfair advantage.

Jeff Henderson, Director of Operations at the US Aluminum Extruders Council, encapsulates the common sentiment of American producers: “”It is worrisome to see the Chinese government continue policies that are essentially aimed at exporting their over-production into the world market.”

China’s should not be surprising. Growth in the world’s second-largest economy has slowed to a 25-year low, hitting demand for industrial raw materials like steel and copper, so domestic producers are looking to sell their surplus on a saturated global market, Reuters notes.

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