Labour Should Help Steelworkers in Both the UK and China

The Chinese economy grew by 6.7% in 2016, as official data predicted, marking its slowest growth for over two decades. A shirking market with fewer calls for infrastructure projects, means that the demand for steel has fallen. Previous excessive capacity generated more sales by lowering international prices, which dragged the UK steelworkers into tough competition.

The Chinese economy grew by 6.7% in 2016, as official data predicted, marking its slowest growth for over two decades. A shirking market with fewer calls for infrastructure projects, means that the demand for steel has fallen. Previous excessive capacity generated more sales by lowering international prices, which dragged the UK steelworkers into tough competition.

 China’s state planner committed to cutting excessive capacity as a top priority at both the G20 summit in Hangzhou and his 13th Five-Year plan. China had already met targets for cutting steel production in 2016, however, a study showed that net operating capacity also rose. Paradoxically, while the officials claim steel production has been decreasing as scheduled, the excessive steel capacity continues to rise.

 This is because of capitalist logic: China’s reform bumps up the price of the steel after millions of steelworkers had been sacked to decrease production. Streamlined factories therefore produce more with increasing efficiency. The local authorities are reluctant to take responsibility for structural unemployment and are unable to fully control the state enterprises because a sluggish economy and social unrest would be harmful to their political careers.

 The UK government now is increasingly eager to develop relations with China after the Brexit vote. Trade negotiation is crucial to help the steelworkers in both countries. The UK should suggest that the state-capitalism method in China should be refined to curb traditional capitalism, such as market liberalisation. It should encourage a centre-left way: transferring efficiency waste into welfarism and environmentalism. This would involve halting overproduction by shortening working hours, investing in wages and welfare, and introducing more measures on reducing emissions for environmental conservation. Price for steel should also be stabilised at an international standard.

 The UK can seize opportunity in the “New Silk Road Summit” that PM Theresa May will join in this summer. The “Belt and Road Initiative” is a development strategy and framework that focuses on connectivity and cooperation among less-developed countries. Steel manufacturing is the key area of capacity cooperation. With the coherent effort of AIIB, EIB and EBRD, the demand for steel has been sustained in emerging markets across Central Asia and Eastern Europe under the scheme. In the short term, cheap steel from China can mitigate poverty for developing economies. In the long run, the price of steel will stabilise and there can be co-prosperity between UK and China.

 In the new trade deal after Brexit, the UK should adopt EU standards on steel and dumping. The high-quality of UK steel should be maintained to make it strongly competitive in an emerging global market. This would not only mitigate the impact of cheap steel dumping from but also opens a possible advantage to the UK after the price of Chinese steel becomes fairer. In other words, massive layoffs in the UK steel industry can be avoided.

 Being an opposition party, Labour should take this issue and supervise the government seriously. Labour must unite with Unions to monitor the Conservatives in their handling of the proceedings of the steel industry. These suggestions would benefit steel workers in both the UK and China.

 

Simon, Man Kit Cheng is a Young Fabian Member

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