As Trump Meets Xi, Remember China’s History of Broken Promises on a Key Trade Issue

By Elizabeth Brotherton-Bunch
Apr 06 2017 |
Getty Images

China repeatedly promised to reduce its industrial overcapacity, but we’re still at a crisis point.

You guys — it's happening!

Chinese President Xi Jinping is meeting with President Trump in Florida today. There's quite a lot riding on the visit, especially considering Trump talked such a big game on trade with China during the presidential campaign. Here at the Alliance for American Manufacturing, we're encouraging the president to keep his campaign promises to U.S. workers when he meets with Xi — and we urge you to tell him to do the same.  

One of the big things Trump needs to do when he meets with Xi is establish clear and enforceable benchmarks for China to reduce its massive industrial overcapacity.

For nearly a decade, China has flooded the market with industrial commodities — steel is the most talked about example, but aluminum, concrete and other sectors also have been effected — and much of it ends up dumped in our market. Tens of thousands of American workers have faced layoffs, and dozens of facilities across the country have closed.

While the U.S. has responded by issuing anti-dumping and countervailing duties, that doesn't address the underlying issue, which is that China is simply making more of these products than the world actually needs.

And the thing is, China knows it has a problem.   

For a decade now, China has repeatedly promised to reduce its industrial overcapacity… and it repeatedly has broken its promise. A recent Greenpeace report found that China's steel production actually increased in 2016, for example. Meanwhile, the United Steelworkers outlined five specific instances in which China pledged to reduce its steelmaking capacity and failed to follow through. The Steelworkers explained why:

"China continues to overbuild its steel industry as a result of being a state-run non-market economy. Beijing has long considered steel a 'strategic industry' and fostered national industrial policies designed to help the industry grow — whether the resources, environmental capacity, and market conditions supported that growth or not."

When senior White House officials previewed the Trump-Xi meeting with reporters earlier this week, they made sure to note that they consider it to be a starting point for future discussions, so it's unlikely we'll see any major trade announcements this week. But China's overcapacity issues are sure to come up, and Trump and his team cannot simply accept another promise from China that it will fix things on its own. 

"It doesn't take a magician to see China's sleight of hand," AAM President Scott Paul noted. "President Trump needs to set clear expectations for China curbing its massive industrial overcapacity. If China is unwilling to keep its past and future promises, there should be clear and enforceable penalities to force action."

Read the United Steelworkers report, "Chinese Steel Overcapacity: A Legacy of Broken Promises."