Steel alliances sought ahead of GATT

PUBLISHED : Wednesday, 11 August, 1993, 12:00am
UPDATED : Wednesday, 11 August, 1993, 12:00am

CHINA'S iron and steel industry is seeking foreign co-operation to improve efficiency and quality to counter the intense foreign competition expected when the country re-enters the General Agreement of Tariffs and Trade (GATT).

In the face of the current GATT negotiations, the industry is adopting every measure, including importing advanced equipment and technology and the renovation of existing equipment, to improve quality and lower production costs.

Currently, overseas steel products are subject to import restrictions such as the requirement of import licences and customs duties.

To meet GATT requirements, China must abolish import licences for all steel products and slash import duties, which are expected to give imports an edge over domestic products.

At present, import duties on iron and steel products range from three per cent to 33.7 per cent.

According to Wardley James Capel, only a few domestic steel products would be a match for foreign goods.

According to official statistics, the annual rate of increase in demand for steel products in China for the past decade was about 8.5 per cent.

The relatively high rate was attributable to the need for steel products in the construction of roads, ports, urban building, industrial equipment and agricultural mechanisation.

Consumption of steel products in China was about 73 million tonnes last year.

The country's output of steel products has also risen steadily over the past 10 years, from 30.7 million tonnes in 1983 to 65.3 million tonnes in 1992.

Among the 1,600 iron and steel enterprises in China, there are 17 whose annual output of steel exceeds one million tonnes, and the output of the top 10 accounts for about half of country's total.

According to officials of the Maanshan Iron and Steel Co (Magang), the Chinese Government plans to expand production facilities in the next seven years with the aim of reaching an annual steel output of 100 million tonnes by 2000.

The company is one of the top 10 in the iron and steel industry and has been chosen by Beijing for listing on the Hong Kong stock exchange.

Magang president Hang Yongyi said yesterday only a great leap in the development of the industry could meet demand for steel products for China's economic take-off.

''In order to increase the steel output, the large iron and steel complexes across the country are planning to upgrade and expand their production capability,'' he said.