Rising oil prices have caused market turmoil around the globe.  The troubles aren’t evenly spread, though.  As Keith Bradsher reports in today’s New York Times, foreign governments are heavily subsidizing energy prices, particularly for diesel fuel, to cut inflation. The subsidies, “estimated at $40 billion this year in China alone,” have the unfortunate side effect of discouraging consumers from conserving fuel.

  This problem extends in an even more consequential manner to steel production.  As a recent AAM report noted, the provincial and national governments of China are busily subsidizing the energy costs of China’s steel producers by as much as $27 billion since 2000.  Not only is this distorting the world market, but it’s allowing China’s producers to continue full-bore production via outdated, polluting industrial plants. 

As long as China’s massive energy subsidies continue for their domestic steel production, U.S. producers will face an uneven playing field.  And for those worried about the rampant air pollution that has made China’s smog a significant contributor to California’s air pollution, there will be little incentive to shape up and move to cleaner emissions.

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This entry was posted on Monday, July 28th, 2008 at 11:25 pm and is filed under Holding China Accountable, Enforcing Trade Laws. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.