World Economy

China Censures US Over Steel Glut Remarks

China Censures US Over Steel Glut RemarksChina Censures US Over Steel Glut Remarks

The Chinese finance minister jabbed back on Monday at complaints from his American counterpart that China’s glut of factories making mountains of steel, aluminum and other products was overwhelming foreign markets and makers.

The finance minister, Lou Jiwei, suggested that foreign officials should curb their complaints about industrial production surpluses because their governments had cheered on China’s investment spree during the global financial crisis that began in 2008. That spree helped create the production gluts now worrying policy makers in Beijing and, increasingly, around the world, NYTimes reported.

“At that time, the whole world applauded and thanked China,” Lou told a news briefing near the end of a day of annual meetings in Beijing between senior Chinese and American officials. “Now they’re saying that China has a production glut that is a drag upon the world. But what did they say at the time?”

Lou was responding to questions about the Treasury Secretary Jacob J. Lew, who has complained that China’s huge surpluses were being sold so cheaply on international markets that they were distorting the global economy.

Lew emphasized those worries on Sunday at a university forum in Beijing, and he raised them again at the opening of the talks.

“The United States supports efforts to reduce excess capacity and leverage in the economy,” Lew said at the opening session of the talks, called the Strategic and Economic Dialogue, held this year on the grounds of the Diaoyutai State Guesthouse in Beijing.

“Excess capacity has a distorting and damaging effect on global markets,” he said. He added that defusing the problem was “critical to the function and stability of international markets.”

  ‘Negative List’

China will submit next week its “negative list” offer of sectors that would remain off-limits to US investment in a US-China bilateral investment treaty, Vice-Premier Wang Yang said on Monday, Reuters reported.

Wang made the comments in opening remarks to the economic track of the US-China talks in Beijing.

US officials have said a negative list that greatly reduces the number of off-limits sectors is critical to reaching a deal.

Jack Lew also said he looked forward to seeing the new negative list when US and Chinese BIT negotiators meet next week in Washington.

“The United States stands ready to advance the ongoing bilateral investment treaty negotiations provided that China is prepared to move forward in negotiating a high-standard and mutually beneficial agreement,” Lew said.

Lew also urged China to remain clear in its communications about foreign exchange policy and implementation.

 “A market-determined exchange rate with two-way flexibility will help foster a more efficient allocation of capital,” he said.

Wang highlighted the difficulties arising from the rising interest-rate trend in the United States.

“Expectations on interest rate rises by the US Federal Reserve have increased uncertainties on economic growth of emerging market economies,” Wang said.