Following the agreement between Chinese steelmaker Hebei Iron & Steel and Serbia’s largest steel producer Zelezara Smederevo for the sale of the latter’s steel works to Hebei Iron & Steel, the European Steel Association (EUROFER) has stated that the purchase of a steel works in an EU candidate country by a state-owned Chinese enterprise raises serious concerns about unfair competition from state-backed enterprises and shines a spotlight on China’s continued lack of progress towards meeting its World Trade Organization (WTO) commitments.
EUROFER director general Axel Eggert stated that foreign investment is genuinely welcome in the EU and the EU neighborhood, but only under fair, undistorted market conditions; however, China’s government is pushing Chinese companies to carry out takeovers abroad. According to Mr. Eggert, in this instance, a steel firm is being invested in by an undertaking, Hebei Iron & Steel, which is directly owned and run by the Chinese government. Zelezara Smederevo was already subject to an ongoing National Restructuring Program as part of Serbia’s EU accession procedure. The subsequent purchase by a Chinese state-owned enterprise undermines both efforts to combat global steel overcapacity and the free and fair conduct of the market.
Mr. Eggert also said that this latest purchase merely reconfirms the problems raised by China’s non-market conditions, worsened by the attempt to project these distortions abroad using state-backed means. Accordingly, he added, the EU must resist calls for market economy status (MES) to be granted until the Chinese government ceases to intervene so intensively in its economy and opens up to free and fair competition and international trade.