BEIJING, China – Regulators told Chinese banks on Thursday to finance steel exports to help reduce a supply glut in a move that could worsen trade tensions with Europe and the United States.
Beijing faces pressure from the United States and Europe to stop what they complain is a strategy of trying to clear away a backlog of steel by exporting at unfairly low prices. Washington imposed anti-dumping duties last month on Chinese steel.
The latest order to finance exports is part of instructions from the Chinese central bank and financial regulators to lenders to support the overhaul of state-owned steel and coal industries.
Beijing is trying to shrink bloated companies, many of them state-owned, in industries including steel, coal, glass, cement and aluminum in which supply exceeds demand. That has led to price-cutting wars and heavy losses.
Last month, Washington announced anti-dumping tariffs of up to 266 per cent on some Chinese steel.
Britain’s government faces pressure to act after Tata Steel cited low-cost Chinese competition when it announced plans this month to sell money-losing operations there that employ 20,000 people. In Brussels, European steelworkers have protested outside the European Union headquarters.
Chinese bank support to steel and coal companies can include “syndicated loans, export credit and project financing,” according to the order by the central bank and the securities, banking and insurance regulators.
It gave no financial targets but said financing might be extended for shifting operations abroad.
China’s minister of human resources announced plans in February to eliminate some 1.8 million jobs in coal and steel. Beijing announced a 100 billion yuan ($15 billion) fund last week to cushion the blow to workers who lose their jobs in the restructuring and help them find new jobs.
Targets for other industries have yet to be announced.
China pushed back against its trading partners this month, announcing anti-dumping duties on steel from the European Union, Japan and South Korea.