China’s Ministry of Commerce (MOC) said on Tuesday that the government is taking concrete steps to cut down the country’s steel capacity, in response to concerns from the European Union (EU) that overcapacity of Chinese steel may hurt markets in the region.
After a string of measures to cut steel overcapacity, China has seen marked progress at considerable costs with the capacity growth having been curbed, the state-run Xinhua News Agency reported on Sunday citing a statement from the MOC.
The State Council announced on Thursday that China will reduce its steel production capacity by 100 million tonnes to 150 million tonnes over the next five years. The government previously cut down steel production capacity by more than 90 million tonnes between 2011 and 2015.
"The moves and plan show China's resolution," the MOC said.
The announcement comes as the EU expressed worries that steel imports from China may hurt the interests of member-nations. It announced that it is considering new anti-dumping investigations this month, according to Xinhua.
As steel overcapacity is a common problem worldwide and requires joint effort, China is willing to make contributions to the matter through sincere talks with members of the World Trade Organization (WTO), the MOC said.
The ministry urged WTO members to stop using a "surrogate country system" on China's exports, saying that the practice will lose its legal basis by the end of the year as stipulated on an agreement signed when China joined the WTO.
Under the "surrogate country system," importers utilize the costs of production in a third country to determine the normal value of exports from a non-market economy.
The system should no longer be adopted in order to trade with China, which has built its market economy after decades of reform and opening up to international markets, Xinhua said.