Final Thoughts

You will be hearing and seeing much more about whether China should be allowed to have “market economy” status. While I don’t pretend to be an expert on the subject, I am learning that as a market economy any trade suits against China would have to be conducted differently than what is currently being done as a non-market economy. Today, even the American Institute for International Steel (AIIS) came out against allowing China market economy status. Their reasoning being most of China’s almost 1 billion net tons of steelmaking capacity is owned by government entities. Their only motivation is for employment out of the mills and not profits. This is obvious when you see a mills in China reporting billions of dollars in debt with no way to repay the debt yet, they continue to produce steel.

Dan Pearson an economist at the Cato Institute and former head of the International Trade Commission (ITC) here in the United States published an article about trade remedy “cure” being worse than “disease” of over-capacity. In his view let China export their wealth to the United States at the expense of their own citizens. He also believes that U.S. steel mills will ultimately survive (I am not sure on that one). Nonetheless, China has to develop the will to stop the losses and the transfer of wealth out of their country to another and setting up trade barriers is not going to be successful.