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Business
Print Edition> Business
UPDATED: May 27, 2013 NO. 22 MAY 30, 2013
Far From a Truce
Trade disputes between China and the West continue to grow as each side views the other with mounting skepticism
By Deng Yaqing
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PIPING IT IN: A worker transports imported stainless steel pipes for a Jiangsu-based company on May 23, 2012 (CFP)

There is no shortage of trade wars between China and the developed world. A dispute broke out again on May 10 when China's Ministry of Commerce (MOFCOM) announced an anti-dumping investigation into some steel tube imports—or in scientific terms, alloy-steel seamless tubes and pipes for use in high temperature and pressure environments—from the EU, the United States and Japan.

China has become the largest market for alloy-steel seamless tubes and pipes, due to rapid economic expansion and a strong demand for thermal power. Such steel tubes and pipes are widely employed in advanced thermal power generating units. Since most developed countries have a saturated thermal power market, China is the most appealing for manufacturers—over 90 percent of the world output goes to China each year.

Some think MOFCOM's investigation is a show of retaliation, because China has been one of the top targets of dumping allegations for much of the past two decades.

China hits back

For many years, companies in developed countries, including the U.S.-based Wyman-Gordon Forgings Inc., the EU-based Vallourec & Mannesmann Tubes and Japan's Sumitomo Metal Mining Co. Ltd., have monopolized the production equipment and technology of alloy-steel seamless tubes. According to the MOFCOM, tubes from the United States, Europe and Japan made up over 94 percent of all such products in the Chinese market from 2009 to 2012.

It was not until 2009 that the Inner Mongolia North Heavy Industries Group successfully produced the first ferrous metal extrusion press with a production capacity of 36,000 tons. Despite being one of the few countries that can manufacture such tubes, dramatic price cuts by foreign rivals have driven domestic manufacturers to the wall.

But the cost of importing the products under investigation declined a remarkable 47.26 percent from 2009 to 2012, according to an anti-dumping application submitted by the Inner Mongolia North Heavy Industries Group.

China's concerns go beyond tubes. According to a report from the Economic Information Daily, the MOFCOM is planning to launch an anti-dumping probe into imported grape wine, as retaliation to the frequent investigations initiated by the EU. The China Alcoholic Drinks Association says roughly one third of grape wine in China is imported from other countries, the EU in particular. Some insiders say that because some EU nations receive government subsidies, the CIF (cost, insurance and freight) of grape wine from the EU could be as low as 1 euro.

Wang Dehui, an expert on grape wine and General Manager of ZHIDE, a professional wine-marketing strategy company based in Shenzhen, south China's Guangdong Province, argued that domestic producers will not be fundamentally revitalized by possible anti-dumping measures because Chinese consumers prefer imported wines.

Massive attack

As early as in October 2009, the U.S. Department of Commerce slapped anti-dumping duties ranging from 32.39 percent to 98.37 percent on imports of seamless pipes from China, claiming that Chinese producers had sold seamless pipes in the United States at a cost of up to 98 percent lower than that of local producers.

Coinciding with the announcement of the investigation into alleged dumping of alloy-steel tubes by EU members, the EU's executive arm is now considering a heavy 47-percent tariff on Chinese solar panels, which is expected to take effect on June 6.

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