China tries to fight overproduction and cut emissions, US and EU whine they have to pay more, while continuing to complain about China's overproduction and environmental violations.
Nov. 13 (Bloomberg) -- China, the world’s largest emitter of greenhouse gases, faces unlikely critics of its efforts to cut pollution: the U.S. and European Union.
At issue is the duty China levies on exported metals, which is aimed at curbing overproduction and emissions of carbon and sulfur gases from furnaces. China’s decision to introduce a tax of 40 percent on coke in 2008 prompted the U.S. and the EU last week to file a complaint to the World Trade Organization, saying the tariffs unfairly inflate prices for overseas buyers.
China, pressed by the U.S. to set limits on gas discharges at the Copenhagen global-warming summit next month, said in September it will lower emissions per unit of economic growth through 2020. The Asian nation targeted metal producers because they consume a fifth of its power, obtained from burning carbon dioxide-emitting coal. Some mines generate solid waste equal to 2,000 times the processed material, the government has said.
“China has wasted a lot of its domestic resources and energy in recent years through excessive mining,” said Dong Chunming, deputy secretary general of the China Magnesium Association. “The strategy is to control production and exports of energy-intensive and polluting industries, and it’s inevitable it will affect the rest of the world.”
The world’s most populous nation is key to United Nations proposals for reducing global emissions. Without new international limits on greenhouse gases, annual discharges will surge 40 percent in the 2007-2030 period to 40.2 billion tons, with three-quarters of the increase coming from China, the Paris-based International Energy Agency estimated this week.
Jobs, Production Loses
As many as 500,000 jobs in industries including automotive and construction are “potentially affected” by China’s export tariffs on metals and companies “risk having to close down,” the EU said on Nov. 4. The 27-nation EU, which didn’t name any companies, has previously made similar complaints against China.
U.S. President Barack Obama makes his first visit to China, the biggest producer of coke, zinc and magnesium, on Nov. 16 amid a spate of trade disputes. The WTO tussle includes the three materials.
The Chinese government said today it is planning new measures to close “seriously polluting” plants, and will target industries including coke, steel and aluminum.
The policies may include offering compensation to workers and companies for plant closures, Zhu Xingxiang, an official at the Ministry of Environmental Protection said in Beijing.
“The purpose for imposing export limits is to protect the environment and ensure efficient usage of the resources,” the nation’s commerce ministry said in a Nov. 5 statement in response to the WTO complaint. “The metals and products involved account for a very small proportion of bilateral trade between China and the U.S.”
Cheaper Materials
The U.S. and EU are seeking cheaper materials as the world economy is poised to recover from the worst crisis since the Great Depression. Global steel demand may jump 9.2 percent next year, with gains of 19 percent in the U.S., the World Steel Association said last month.
The Chinese government banned the expansion of coke projects for three years in September, and has said it will eliminate 400,000 metric tons of zinc smelting capacity. Coke is used to make steel and zinc is needed to rust-proof the metal.
“Developed countries prefer importing coke to producing it because the environmental barriers for building coke ovens in their countries are too high,” said Wang Ling, a Beijing-based analyst at Umetal, a steel research company.
Making coke from coal can emit more than 2,000 chemicals including benzopyrene, which can cause cancer, Wang said. As many as 94 percent of Chinese producers lack money to upgrade plants to prevent “massive amount of emissions of carbon, sulfur and nitrogen,” she said.
Coke Quotas
U.S. Steel Corp., the largest steelmaker in the nation, in April halted a $1.2 billion renovation of a Pennsylvania plant, which was to make coke ovens that produce fewer emissions. China accounts for 60 percent of global trade in coke.
China imposed coke export quotas on companies including China Minmetals Corp., Sinosteel Corp. and Shanxi Coking Co.
The Chinese tariffs “significantly distort the international market and provide preferential conditions for Chinese industries that use these raw materials,” Debbie Mesloh, a spokeswoman for the U.S. Trade Representative’s office, said in a Nov. 4 statement.
Five U.S. steel industry organizations including the American Iron and Steel Institute and the United Steelworkers in June supported the complaint. They represent mills including U.S. Steel and Nucor Corp.
Rare Earths
The WTO complaint follows earlier concerns that China may cut output and exports of rare earth minerals such as dysprosium, needed to make hybrid cars and televisions. Mining a ton of rare earth leads to 2,000 tons of dirt and waste, said Wang Caifeng, a deputy director at China’s industry ministry.
China’s Environmental Protection Ministry vowed in September to “strictly enforce” anti-pollution rules for smelters after thousands of children were poisoned by lead, zinc and manganese plants in Yunnan, Henan, Shaanxi and Hunan provinces. Smelters may be shut, the ministry said then.
“It’s very polluting and China has excessive capacity and many small inefficient mines and smelters, so the government wants consolidation,” said Jin Xiangyun, a Beijing-based analyst at Beijing Antaike Information Development Co. China will make 4.3 million tons of refined zinc this year, she said.
China’s President Hu Jintao pledged in September to cut carbon dioxide emissions from factories and power plants by a ‘notable margin” compared with economic growth by 2020 from 2005 levels. Coal-fired power plants make up 80 percent of power generation in the country.
The Asian nation is the second-biggest trading partner of the 27-nation EU and also passed Canada to become the largest source of U.S. imports in 2007.
The WTO complaint “just escalates trade protectionism,” said Wen Xianjun, deputy head of China’s Nonferrous Metals Association. ‘Neither side will be a winner eventually.”
--Xiao Yu and Helen Yuan, with assistance from Winnie Zhu, Li Xiaowei and Jennifer Freedman. Editors: Tan Hwee Ann, Teo Chian Wei.
To contact the Bloomberg News Staff of this story: Xiao Yu in Beijing at yxiao@bloomberg.net; Helen Yuan in Shanghai at hyuan@bloomberg.net
The hypocrisy is quite amazing.
Have a very nice day.
-fgalkin
