Chinas Steel Industry
China’s steel industry has emerged as a major producer on the global stage, becoming a crucial part of the global economy. China is the world’s largest producer and consumer of steel, with production and consumption reaching more than 1.2 billion tons per year. This has put the Chinese steel industry in a unique position, as it dominates both the production and consumption of steel worldwide.
China’s steel industry has a long history, dating back thousands of years, with some of its earliest production dating back to 645 BC. As the nation’s steel industry developed, it was heavily reliant on imported ore, such as copper and iron, to manufacture its steel. By the 1950s more of the trade routes were used to move steel from China to other countries, helping to strengthen the industry. During the Cultural Revolution, production increased immensely as the need for steel increased. At the turn of the millennium, China had reached the point of being the world’s leading exporter of steel.
The domestic Chinese steel industry is a relatively new one and is defined by its large state-owned enterprises. This has been accentuated in recent years as the Chinese government has taken greater control of the industry and deregulation. With a single market that is strongly managed by the government, it is estimated that there are over 500 steel-producing enterprises across the country. This has had the effect of keeping prices low, preventing decline in domestic demand, and giving steel producers a degree of market power.
The Chinese steel industry is largely export-driven. In 2018, exports accounted for about 70% of China’s total steel production, making it the largest exporter of steel in the world. Chinese steel producers are able to offer low-cost products, due to minimized labor and manufacturing costs, which increases their appeal to international steel buyers. China has also been known to practice “dumping” which is the practice of selling products in foreign markets at prices below their domestic prices. This has had the effect of increasing the market share of Chinese steel producers in other countries.
Although the Chinese steel industry has been key to the economic development of the last two decades, there have been numerous environmental and social criticisms associated with its growth. The most prominent of these relate to the industry’s high energy consumption, overuse of resources, and its high emissions of greenhouse gases. The production process produces a large amount of air, water and soil pollution, as well as solid waste, which then has to be managed, at greater cost. Additionally, the industry has also been linked to forced labor practices and exploitation of workers.
Overall, the Chinese steel industry has come to dominate the global market and has had an immense impact on the shape of the global economy. As China continues to expand its production and consumption, the global market will continue to be influenced by its presence, through both pricing and production. The Chinese steel industry has come to define not only globalization, but also the future of industry.
