China’s Subsidies Draw More International Wrath

The world’s man of steel is getting a taste of kryptonite.

The EU plans to launch an antitrust probe into China’s domestic subsidies for steelmakers, the Financial Times reported on Tuesday. This comes shortly after the EU announced a similar probe into China’s EV subsidies, and is part of a growing trend of nations finding ways to crack down on China-made goods.

Steeling Nerves

China is the world’s top steel-producing nation, churning out approximately 55% of the world’s crude steel in December 2022, according to the World Steel Association. The next-biggest steel producer, India, accounted for roughly 7.5% of the world’s steel that month. This year also has seen a big uptick in Chinese steel exports, which are set to hit the highest levels since 2016 as the wilting of China’s domestic real estate industry means softer demand inside its borders.

Sources told the FT that the EU’s upcoming move against Chinese steel is being done in tandem with Washington, so the two powers can present a united front — with the added bonus (or motivating factor) that Washington officials promised to let lapse some US tariffs on EU steel imposed during the last administration. The EU and US aren’t the only ones getting feisty about Chinese goods:

• India is taking back its own subsidies that it gave to businesses in the blossoming e-scooter industry for using parts manufactured in China. Modi’s government has demanded the return of a total of $60 million spread across five companies.
• This isn’t the first time the EU has gotten bent out of shape about Chinese steel policy. In 2021, it imposed tariffs on Indonesian stainless steel because it argued that through China’s Belt and Road Initiative, Indonesia was unfairly subsidizing its own industry.

Chips and Market Dips: Saudi Arabia is starting to fret over its own ties to China, specifically with AI. Per another FT report, members at Saudi Arabia’s King Abdullah University of Science and Technology (Kaust) are worried that collaboration with Chinese research might lead to US restrictions on what semiconductors they can import as part of the US-China chip war. Not like Saudi Arabia to worry about geopolitical blowback…