China using energy subsidies to boost steel production

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China has boosted its steel output during the last three years through energy subsidies, said the Alliance for American Manufacturing.

Total Chinese energy subsidies for steel reached $27.1 billion during the last seven years. Despite the country’s entry into the World Trade Organization – which deems subsidies on steel illegal – the subsides continued to grow, the trade organization said in a report today.

“China has identified steel as a strategic industry, and both central and provincial governments have decided to ramp up steel production with massive subsidies that have now been confirmed,” said Usha C. Haley, author of the report.

China is the largest producer and consumer of steel in the world. Competition with China has displaced more than 1.8 million U.S. jobs, according to the Economic Policy Insitute.

“The shift from a net importer to the largest exporter in a span of only two to three years is staggering,” Haley said. “Our analysis shows that energy subsidies have a very strong correlation with Chinese steel exports.”