In 2000, there were more than 100 U.S. steel companies that produced 100 million metric tons of steel annually and employed 136,000 people in communities across the country.
Soon after, China started building its own steel plants. Its production capacity ballooned, depriving U.S. steel companies of valuable market opportunities. Low priced Chinese steel flooded the global market, driving out businesses in the U.S. and around the world.
Every steel plant that shuttered left hundreds of workers without livelihoods. It also left communities reeling, as small businesses dependent on plants also closed their doors and blighted buildings brought down real estate values, U.S Trade Representative Katherine Tai said in a speech before the Center for Strategic & International Studies (CSIS).
Today, she added, China produces over 1 billion metric tons annually – and accounts for nearly 60% of global steel production. “China produces more steel in a single month than the United States and most other countries in the world produce in an entire year. In the U.S., employment in the steel industry has dropped 40% since 2000,” she said.
Turning to solar technology, Tai noted the U.S. “was once a global leader in the production of photovoltaic solar cells. As China built out its own industry, our companies were forced to close their doors. Today, China represents 80% of global production – and large parts of the solar supply chain don’t even exist in the United States.”
Turning to agriculture, Tai said U.S. market share in China is shrinking and agriculture remains an unpredictable sector for U.S. farmers and ranchers who have come to rely heavily on this market. China’s regulatory authorities continue to deploy measures that limit or threaten the market access for U.S. producers – and their bottom line, Tai said.
U.S. and other foreign wine producers have been spared that sort of devastation thus far. China’s wine market has been slowing since 2018, a result of the country’s slowing economy and the China-U.S. trade war.
China’s imports of wine dropped by 27% in value to $1.95 billion US last year, according to customs data. This is a sharp decline for the second year in a row: the accelerated growth that we have seen in the past seems to have come to an end. It should be noted that compared to domestically-produced wine, imported wine grew markedly from US$2.03bn in 2015 to 2019’s US$2.43bn – even allowing for the distorting effect of the pandemic it was still growing up to 2020.
Domestically-produced Chinese wine – mainly from the country’s two biggest producers, Changyu Pioneer Wine Company and GreatWall Wine – has traditionally dominated the market but the balance has now changed. imported wine has overtaken Chinese wine to be the main category consumed within the country, taking up 60% market share in terms of volume.
But China has demonstrated with Australia that it is willing to use wine imports as a weapon in trade and other disputes. China is Australia’s biggest export market, and in November China decided to impose tariffs of up to 212% on Australian wine imports. Some 800 wine producers in Australia reportedly built their businesses around exporting to China.
China accused Australia of dumping wine, a charge Australian official vehemently deny, Australia roused China’s ire after calling for an investigation into the origins of the Covid-19 pandemic.
It’s worth noting that the average farm in China is quite small, just 0.6 acre, and Chinese officials have linked the growth of the urban industrial sector and the movement of people from the countryside to the cities to a plan to dramatically increase agricultural production.
In her speech, Tai tied dealing with China’s import-export policies to passage of the $1 trillion infrastructure bill, saying repairing roads and bridges, modernizing ports will give U.S. businesses “the boost needed to embrace their global competitiveness.
“China and other countries have been investing in their infrastructure for decades. If we are going to compete in the global market, we need to make equal or greater investments here at home,” she said. The “core” of the Biden Administration’s strategy is a commitment to working with allies to create fair and open markets,” she explained.
Comment: What she didn’t say, but should have in our opinion, is that no business or agricultural sector should build its strategy around the idea of large exports to China. The country has shown that even without provocation, it can quickly produce enough goods to not only supply much of its internal market, decimating other countries exports to China, but also produce enough to dominate the global market in any commodity.
And when there’s a policy dispute on a totally unrelated subject, China is perfectly willing to punish other nations by imposing massive tariffs. Just ask Australia.
