If you’re not fast enough at changing the channel after the football game you may be exposed to an unfortunate glimpse at 60 Minutes — a generally hype-based, fact-check lax network TV “news” program of the most heinous faux-authoritative sort.
The five minutes of it that I was subjected to today had their anchor going into a decommissioned Ohio steel mill town. The reporter claimed that the most recent steel plant to go out of business was because of imports of cheap Chinese steel and lamented about how the next era of global economic dominance may not belong to America, with the implication was that it would instead belong to China. I believe he said that 500 or so people were laid off from the plant.
It was enough to make you think that steel production is booming in China and that Chinese steel workers have swallowed American jobs. That couldn’t be farther from the truth. While 500 workers lost their jobs in Ohio, China is in the process of laying off millions — yes, millions — of workers in their heavy industries, mainly focusing on steel and coal. There are ongoing protests in various cities in the industrial northeast of the country that are being virtually liquidated in the transition:
China aims to lay off 5-6 million state workers over the next two to three years as part of efforts to curb industrial overcapacity and pollution, two reliable sources said, Beijing’s boldest retrenchment program in almost two decades.
China’s leadership, obsessed with maintaining stability and making sure redundancies do not lead to unrest, will spend nearly 150 billion yuan ($23 billion) to cover layoffs in just the coal and steel sectors in the next 2-3 years.
The overall figure is likely to rise as closures spread to other industries and even more funding will be required to handle the debt left behind by “zombie” state firms.
Industrial production is now global. The worry is no longer Chinese oversupply, American under-supply, etc . . . but global oversupply. To block oversupply in one country in an artificial attempt to bolster it in another misses the point. We’re all in the same boat. Where something is made will become more and more irrelevant.
On almost the exact same day that the announcement came out of cuts in China’s domestic steel industry came another about a state-owned Chinese steel company buying a giant steel mill in Serbia.