Between 6-7 June, the U.S. and China were engaged in the 8th Strategic and Economic Dialogue (S&ED). The meeting, established by President Obama and former Chinese president Hu Jintao in 2009, has notoriously failed to result in agreements. As a consequence, the forum is widely considered consultative, at best.
This year, the round was led by Secretary of State John Kerry and Lew on the U.S. side and Vice Premier Wang Yang and State Councilor Yang Jiechi, on the Chinese side. The agenda covered 9 areas and 120 topics ranging from disability rights, wildlife trafficking, currency and production oversupply, to space, nuclear nonproliferation and climate change. Two of these topics, in particular, caught the eyes of political and economic analysts.
Steel overcapacity
Cutting the excess capacity of steel, “which has a distorting and damaging effect on global markets” according to U.S. Treasury Secretary Jacob Lew was, by far, the most stringent economic issue on the table. China had promised earlier this year to address the much-needed reduction of the state-owned steel industry.
At the opening of the event, Chinese President Xi Jinping re-emphasized his commitment to address overcapacity, but without giving further details, while the Chinese finance minister said China needs time to allow market forces to reduce surplus production capacity.
China produces 50% of the world steel output, almost double the share it had in 2004. In 2015, it also consumed over 5% less than in 2013 when it was at its peak. As the market gradually became flooded with cheap Chinese steel, the U.S. imposed 210% anti-dumping and 241% anti-subsidy duties for the Chinese steelmakers.
Source:Globalriskinsights