AISI Urges Clinton, Geithner to Press China for Economic Reforms: U.S. Must Confront China Over Currency, Subsidies and Market-Distorting Industrial Policies

Washington, D.C., 5/19/2010 - In a letter delivered to Secretary of State Hillary Rodham Clinton and Secretary of the Treasury Timothy F. Geithner, Thomas J. Gibson, president and CEO of the American Iron and Steel Institute (AISI), urged the Administration to press China to reform its trade-distorting industrial policies and undervalued currency as the United States prepares for the May 24-25 Strategic and Economic Dialogue (S&ED) with the government of China. 

To read AISI’s full letter, click here

The letter urges the United States first and foremost to keep pressing China to address its currency manipulation.    

“A mere repeat of the minor changes in Chinese currency practices that occurred in July of 2005 is not an acceptable outcome,” Gibson stated.    “Significant and lasting reform in China currency policy is necessary to redress global structural imbalances, create U.S. jobs growth, preserve and strengthen the U.S. manufacturing base and achieve the President’s goal of a doubling of U.S. exports by 2015.” 

Gibson said AISI strongly supports President Obama’s National Export Initiative, but warned that his goal will not be met unless the Administration applies greater pressure on the government of China “to eliminate market-distorting industrial policies, such as massive government subsides…as well as measures to limit imports, restrict foreign investment, manipulate VAT rebates and restrict exports of vital raw materials.”     

China plans in a few weeks to announce its new Five-Year Plan of central government direction and control of the Chinese Iron and Steel Sector.   Left unchallenged, government-supported steel capacity additions are continuing in China, with expectations that China’s total steelmaking capacity will expand to roughly seven times that of the United States by 2012, Gibson’s letter stated.

“Unless countered, the result will be more Chinese disruption of world markets, not just in steel, but also in steel-consuming industries, which constitute the bulk of our domestic manufacturing base.”  Likewise, Gibson called for the lifting by China’s central government of the severe restrictions it places on foreign investment in its government-owned steel industry even while its own centrally-owned steel industry seeks to invest in American steel mills.   Just this week it was announced that Anshan Iron and Steel Group, which is owned and controlled by the Chinese central government, has entered into a joint venture with a steel mill in Mississippi.  Gibson expressed dismay at “this latest example of the lack of reciprocity in our bilateral steel trade relationship” and called for “very careful review of the proposed transaction by U.S. authorities.”

The next S&ED provides the United States with an opportunity to protect America’s manufacturing base by engaging in direct talks and calling for significant trade and market reform by the government of China.  American businesses cannot compete in the global economy while China continues to deliberately undervalue its currency and engage in trade-distorting practices that give an unfair advantage to Chinese industries, such as steel, Gibson said. 

To read AISI’s full letter, click here

AISI serves as the voice of the North American steel industry in the public policy arena and advances the case for steel in the marketplace as the preferred material of choice.  AISI also plays a lead role in the development and application of new steels and steelmaking technology.  AISI is comprised of 25 member companies, including integrated and electric furnace steelmakers, and 138 associate and affiliate members who are suppliers to or customers of the steel industry.  AISI's member companies represent approximately 75 percent of both U.S. and North American steel capacity.  For more news about steel and its applications, view AISI’s Web site at www.steel.org.

Contact:
Nancy Gravatt
Vice President, Communications
American Iron and Steel Institute
Tel: 202.452.7115