China Excess Capacity a Global Trade Concern, EU’s Ashton Says Go back »

2009-09-09 | Beijing, Shanghai, Southwest China, Nanjing, Shenyang, Tianjin, South China

China Excess Capacity a Global Trade Concern, EU’s Ashton Says
Bloomberg, 9th September 2009

Sept. 9 (Bloomberg) -- China’s excess production capacity is an “international concern” as goods that can’t be sold locally may be sent to markets that have shrunk amid the global slump, European Union Trade Commissioner Catherine Ashton said.

Such exports would be “inconsistent” with Premier Wen Jiabao’s call for China to create an economy that’s less dependent on trade and more driven by consumption and service industries, Ashton said in a speech in Beijing today.

A 4 trillion-yuan ($586 billion) stimulus plan and record first-half bank lending of $1.1 trillion may lead to additional export capacity. China’s State Council last month ordered officials to “resolutely” curb overcapacity in industries including steel, cement, coal, glass and power, saying the economy is still in a “critical period.”

"Where lending is focused on sectors that suffer from overcapacity, concerns about unfair trade may arise,” Ashton said. “Creating a sustainable path for development will be a huge challenge.”

She also urged China to “open further” to foreign firms public projects in renewable energy, especially wind- and solar- panel farms.

Overseas companies lost out on 5 billion euros ($7 billion) of wind-energy projects under China’s stimulus plan because bidding criteria made it impossible for them to compete, the European Chamber of Commerce in China said in May.

World Trade Talks

No foreign wind-turbine maker has won a bid since 2005, it added last week. “There is a marked lack of consistency in the application of qualification criteria” for public procurement projects, the chamber said in an annual position paper on China.

General Electric Co., Suzlon Energy Ltd., Gamesa Corp. Tecnologica SA and Vestas Wind Systems A/S were among companies bidding for 25 wind-energy projects with generation capacity of 5.25 gigawatts, according to the chamber.

A meeting of trade ministers in New Delhi last week had given the Doha round of world trade talks "renewed momentum,” Ashton said.

World Trade Organization negotiators will resume work on Sept. 14, seeking to make up lost time after ministerial-level discussions collapsed in July 2008 over a spat between the U.S. and India on farm tariffs. Trade ministers have set a 2010 target to secure a new accord.

An agreement would add at least $150 billion to the world economy per year, perhaps twice that, and "would be the ideal boost to the world economy, especially for developing countries,” Ashton said.

Source: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aSiTzm_d5fTI