The Transformation of China’s Steel Industry.pdfVIP

HKU416 XIAOHONG WU MICHAEL J. ENRIGHT THE TRANSFORMATION OF CHINA’S STEEL INDUSTRY China is the fastest growing and largest steel-producing and steel-consuming country in the world, accounting for 23% of global production and 27% of consumption in 2003. In just a decade, these figures had increased nearly twofold – they were 12.3% and 17% respectively in 1993.1 The massive expansion of China’s steel industry has been a key factor in the revival of the world steel industry in recent years. A steel-making surge in late 2003 resulted in the most widespread shortage of raw materials in the history of the steel industry. Despite China’s status as the world’s largest steel-producing country, it was also one of the largest net steel importers in the world. The International Iron and Steel Institute (IISI) statistics showed that China imported 22.6 million tons of steel in 2002, making it the world’s second largest net importer, after the United States (US).2 Although it turned a net exporter of steel in November 2004, China remains a net importer of high-value added steel to make up for the shortfalls in supply. Net imports of steel sheet products in China, based on the World Steel Dynamics’ hot-rolled band equivalent (HRBEQ), were estimated at 24 million tons annually in 2004.3 China’s accession to the World Trade Organization (WTO) produced profound structural impacts on a wide range of Chinese industries, including the steel industry. High-end products would be most affected because tariff reductions favoured that end of the market. The impact of tariff reduction would be compounded when other barriers on steel imports were removed, the steel trading and distribution systems