China's Steel Factories (Photo : Getty Images)
China has continued to produce steel, as its steelmaking capacity rose to 36.5 tons in 2016, or twice Britain's total annual production capacity despite pledges to cut down on production, according to a report by Custeel, a steel consultancy, and Greenpeace East Asia.
More than half of the world's steel is produced by China but as its economy slowed down and global demand declined, the steel industry was left with a huge excess capacity, the Economic Times said.
China has been criticized for dumping its steel products on world markets, violating trade agreements and causing prices to drop.
In 2016, China promised to deal with steel overcapacity by consolidating its production and closing down idle factories.
But, while it reduced some capacity, China opened new factories or restarted idle plants, according to the Custeel and Greenpeace report.
In three provinces near Beijing, steel production has increased by eighty percent, which raised air pollution levels in the capital at the end of 2016 and early this year, the report added.
The report pinpointed steelmaking as the second largest emitter of air pollution in the country.
China's efforts to reduce capacity has reportedly affected about three-quarters of the plants, which were already idle.
Lauri Myllyvirta, Greenpeace global coal campaigner, however, said that instead of closing down firms, some local officials continue to "shield zombie steel mills and minimize the impact of the policies" on reducing steel capacity.
At the G20 meeting in Hangzhou, an agreement was reached urging China to address steel capacity but its trade partners continue to accuse the country of dumping and violating rules of the trade agreement.
The U.S. Department of Commerce earlier this month imposed heavy tariffs on some Chinese steel imports, which ranged from 63 percent to 190 percent. The duties were imposed on Chinese exporters believed to be selling products below fair value or those being subsidized.
Last month, the European Union also proposed charging taxes, from 30.7 percent to 64.9 percent, on Chinese steel products, with the aim to help struggling European steelmakers.
According to Custeel report, the country must focus on reducing the operation of steel factories and not only the idle ones, noting that a new capacity of more than 20 million tons is out for release soon.
It also recommended the demolition of factories, not just sealing up, to prevent their re-opening in the future.