Yang Yanyi, Head of the Chinese Mission to the EU is seen in this file photo taken in October of 2014. (Photo by Fu Jing/chinadaily.com.cn)
The recent weeks have seen further worrying moves in Brussels. The European Commission opened new anti-dumping investigations on steel products originating from China, and the European steel industry organized a demonstration against so-called Chinese dumping on the EU market and the granting of Market Economy Status for China.
The message carried – the protectionist sentiment is worrying and the confrontational approach is regrettable and misleading.
No body should be under any illusion: overcapacity, including excessive capacity of the global steel sector is one of the many challenges we are all faced with. Not only European steel industry sector has been hard hit, iron and steel industries in China and many other emerging economies are bearing the brunt, suffering badly from excessive production and flagging demand.
According to some estimates, a reduction of overcapacity cut back by 30% in those industries with most excess capacity—iron and steel, coal, cement, ship building, aluminum and flat glass is expected to affect employment of three million workers.
Not to mention that China is also confronted with many other daunting tasks: lifting out of poverty the remaining 70 million people, advancing industrialization to transform China into a post-industrial society, re-balancing the economy from investment and net exports to consumption and innovation.
The situation is serious and requires a response.
But what kind of response? Grumble, curse, cut the ground from under other's feet, retreat into protectionism and to be at each other's throats?
If history serves as a guide, these are unwelcome if not irresponsible responses. They may help to give vent to one's anger and frustration and obtain short-term gains, but fail to serve one's long-term self-interest and common interest of all.
Obviously how to respond to challenges belongs to the competence of each and every country. I only wish to share what we believe to be the best possible approachand option and what China has been doing and will continue to do with regard to the issue on hand.
First, digest the problem and not dump it onto other'sdoorsteps.
Development of the steel industry in China is mainly to meet its domestic demand, rather than to export to other countries.
To effectively deal with the overcapacity problems, China has taken tough measures to control new capacity.Painful as it is, China has cut its steel industry capacity by more than 90 million tons over the past few years and investment in iron and steel assets by 13% last year andthe growth of Chinese steel production has basically come to a halt.
To continue to address overcapacity in a serious and resolute manner, China has made elimination of overcapacity the top priority for this year and will cut the steel industry capacity by another 100-150 million tons.
Second, take the tackling of overcapacity an opportunity to accelerate economic restructuring.
The Chinese word for "crises" is made up of two characters, crisis and opportunity. Guided by ourconventional wisdom that opportunities are embedded in crises and that we must be good at getting to grips with them, China is pushing through essential reforms and restructuring against all odds.
Being fully aware that much of China's industrial overcapacity is heavily concentrated at the lower end of the value curve, we have taken restructuring of the iron and steel sector an important part of our endeavor to complete the difficult transition of moving China away from an investment-led economy to a consumer-oriented one.
China is actively restructuring the steel sector byeliminating outmoded capacity, creating exit strategies for "zombie companies" based on market rules and encouraging promotion of innovation, technology, quality and management to meet production safety, energy consumption and environmental protection standards, ensure effective supply of high quality products.
In addition, we have put in place stricter supervision over local authorities to guard against excess production and tendency to protect enterprises with favorable policies.
