In a letter delivered to Ms Hillary Rodham Clinton Secretary of State and Mr Timothy F Geithner Secretary of the Treasury, Mr Thomas J Gibson president and CEO of American Iron & Steel Institute has urged the administration to press China to reform its trade distorting industrial policies and undervalued currency as the United States prepares for the May 24th 2010 to May 25th 2010 Strategic & Economic Dialogue with the government of China.
The letter urges the United States to first and foremost to keep pressing China to address its currency manipulation.
Mr Gibson said that "A mere repeat of the minor changes in Chinese currency practices that occurred in July of 2005 is not an acceptable outcome. Significant and lasting reform in China currency policy is necessary to redress global structural imbalances, create US jobs growth, preserve and strengthen the US manufacturing base and achieve the President’s goal of a doubling of US exports by 2015."
Mr Gibson said that "AISI strongly supports President Obama’s National Export Initiative, but warned that his goal will not be met unless the Administration applies greater pressure on the government of China to eliminate market distorting industrial policies, such as massive government subsides as well as measures to limit imports, restrict foreign investment, manipulate VAT rebates and restrict exports of vital raw materials."
Mr Gibson''s letter stated that China plans in a few weeks to announce its new Five Year Plan of central government direction and control of the Chinese Iron and Steel Sector. Left unchallenged, government supported steel capacity additions are continuing in China, with expectations that China’s total steelmaking capacity will expand to roughly seven times that of the United States by 2012.
“Unless countered, the result will be more Chinese disruption of world markets, not just in steel, but also in steel-consuming industries, which constitute the bulk of our domestic manufacturing base.”
Likewise, Mr Gibson called for the lifting by China’s central government of the severe restrictions it places on foreign investment in its government owned steel industry even while its own centrally owned steel industry seeks to invest in American steel mills. Just this week it was announced that Anshan Iron and Steel Group, which is owned and controlled by the Chinese central government, has entered into a joint venture with a steel mill in Mississippi.
Mr Gibson expressed dismay at this latest example of the lack of reciprocity in our bilateral steel trade relationship and called for very careful review of the proposed transaction by US authorities.
Mr Gibson said that the next S&ED provides the United States with an opportunity to protect America''s manufacturing base by engaging in direct talks and calling for significant trade and market reform by the government of China. American businesses cannot compete in the global economy while China continues to deliberately undervalue its currency and engage in trade distorting practices that give an unfair advantage to Chinese industries, such as steel.