Chinese Overcapacity as a Justification for US Trade Protectionism?

Forex News

The United States, European Union and Japan accused China of illegal trade by subsidizing bloated steel and aluminum sectors and flooding the world with cheap exports. US President Donald Trump used China's giant steel and aluminum sector as an excuse for imposing tariffs on world supplies, provoking protests from many countries.

But still, a study by Global Trade Alert (a Swiss-based trade watchdog) said the concept of global surplus capacity, commonly used to support the creation of a trade defense against China, is inaccurate and unjustified, as an excuse for protectionism in the United States.

A study on Chinese and US sources says that other sectors that are believed to have excess capacity include glass, shipbuilding, base metals, paper, chemicals, batteries and shoes. But for most of them, Chinese excess capacity has had little impact on global trade, the study said. It found that the export of these products by China was only a small fraction of total exports and less than 2% of imports of imported G20 countries.