China warns EU steel probe will push up costs

BEIJING (Reuters) -China said on Thursday that European Union plans to investigate its steelmakers over subsidies will disrupt global supply chains and fly in the face of international trade norms.

Brussels is reportedly planning anti-subsidy investigations of steelmakers producing excess in countries such as China, as part of a pact with the United States. In return, the U.S. will not re-impose Trump-era tariffs on EU steel and aluminium.

"The Chinese side believes that the abovementioned actions of the Europan Union will disrupt the order of international trade," said a spokesperson of China's commerce ministry, He Yadong.

"The EU's practices push up downstream production costs, affecting the interests of consumers, and are not conducive to the stability of global industrial and supply chains."

On Tuesday, the Financial Times said the bloc planned to announce the probe when U.S. President Joe Biden hosts European Commission President Ursula von der Leyen and European Council President Charles Michel on Oct. 20.

During trade talks in Beijing last month, China's economy tsar, He Lifeng, asked Valdis Dombrovskis, the EU trade dommissioner, to "exercise restraint in the use of trade remedy measures".

The European Commission recently launched an investigation to decide whether to impose punitive tariffs to protect EU producers against cheaper Chinese electric vehicle imports that it says also benefit from state subsidies.

Beijing has also objected to EU plans for a Carbon Border Adjustment Mechanism that will set tariffs of 20% to 35% on goods with a high carbon price, such as steel and iron ore.

"We firmly oppose unilateralism, trade protectionism and the abuse of trade remedies," He said. "We will closely monitor the follow-up actions of the European side."

The EU has already put punitive tariffs on 20 grades of Chinese steel and stainless steel products and has set import quotas in moves to safeguard its market until mid-2024.

China's shipments have fallen steadily since 2018 to less than a tenth of EU steel import volumes, compared to 2015, when they made up a quarter, according to EU steelmakers federation Eurofer.

(Additional reporting by Amy Lv and Qiaoyi Li; Editing by Christian Schmollinger and Clarence Fernandez)

By Joe Cash