The Spark

“The emancipation of the working class will only be achieved by the working class itself.” — Karl Marx

A Chinese Red Herring

Jan 4, 2016

The main explanation of the steel crisis given by everyone – from the bosses and politicians to union leaders – is that China is “flooding” the world market with under-priced steel.

However, this is little more than a red herring. The world price of steel started falling after the 2008 banking crash, losing 75 percent of its value since. But over that whole period of time, China’s exports to the entire world have always been very low, around one percent of the world’s production! This is hardly a flood!

Besides, who mentioned the fact that China mostly exports raw steel, whereas the British steel industry produces mostly more technologically advanced finished products? In fact, China actually buys 15 percent of Britain’s steel exports – a bounty for Britain’s steel companies!

So, rather than being undermined by China’s “mischief,” it may well be that these British-based companies are scaling down their production in anticipation of a sharp reduction in China’s imports of their steel products, as a result of its own economic difficulties. China is such a convenient scape-goat!