It should never be forgotten that the world’s second largest economy is not a capitalist country, but a communist one. Historically, communism and capitalism were implacable foes bent on each other’s demise. It may explain why the Chinese don’t always play by the rules of the rest of the capitalist world as they seek domestic advantage whilst playing the capitalists at their own game. Take aluminum exports for example…
The American government is concerned that China is exporting aluminum alloy into the USA at below cost or after application of illegal government subsidies. This means that the domestic product is not competing on a level playing field against the Chinese import and that customers may switch away from domestic producers in favor of the cheaper Chinese import – capitalism at work.
Following an investigation into the aluminum trade, the Commerce Department has concluded that the Chinese is indeed dumping aluminum alloy onto the US market by marketing it below cost or following governmental subsidies, giving Chinese producers an unfair commercial advantage. They intend to apply tariffs on relevant Chinese aluminum imports, thereby forcing up the prices paid by US customers and making the products less competitive in the US economy. The tariffs will be applied on the products of several Chinese manufacturers and will range from 50 to 100% of the product price. However, the application of the proposed tariffs requires approval from the International Trade Commission which will announce its decision in two weeks.
The US Commerce Secretary, Wilbur Ross, released a bellicose statement on the matter: “This Administration is committed to trade that is fair and reciprocal, and we will not allow American workers and businesses to be harmed by unfair imports”.
According to the Commerce Department, the USA imported some $389 million worth of aluminum foil in 2016.
The Obama administration raised its concerns about Chinese aluminum exports with the World Trade Organisation, but under the Trump administration, the Commerce Department has launched investigations into Chinese steel and aluminum exports on national security grounds. For its part, China has expressed its “strong dissatisfaction” with the latest US moves and stated that it will defend its legal rights and interests.