WASHINGTON, April 17, 2017 /PRNewswire-USNewswire/ -- Considering the recent bailout of China's largest Aluminum Producer Hongqiao, the China Trade Task Force (CTTF) today released a statement calling on the Trump administration to move forward with a WTO case to eliminate China's illegal aluminum subsidies. China's largest aluminum producer Hongqiao is facing fraud allegations for underreporting production costs and failing to disclose electricity expenses—one of the biggest costs for aluminum producers.
China's excess aluminum capacity has decimated the U.S. economy. Over the last 18 months, 3,500 aluminum works have lost their jobs. Since joining the WTO in 2001, China has gone from being a relatively small aluminum producer to the largest in the world, currently producing more than 50% of global aluminum supply. Over the same period, more than a dozen U.S. aluminum primary smelters in the United States have been forced to closed
Jeff Henderson, President of the Aluminum Extruders Council noted that "the recent bailout of China's largest aluminum producer Hongqiao reveals the lengths at which the Chinese government is willing to go to protect its subsidized industry," Mr. Henderson went onto note that "individual dumping and subsidy cases on specific products do not address the root cause of the problem. Decisive action from the World Trade Organization (WTO) is the only thing that will curtail China's aluminum excess capacity."
In February 2017, Emerson Analytics released a report alleging that Hongqiao has hidden 21.6 billion yuan ($3.14 billion) in costs. Many of the allegations in this report largely reflect similar subsidy allegations in the United States Trade Representative's request for consultations. Amidst this uncertainty, Hongqiao's new auditors have refused to certify to the accuracy of Hongqiao's financial statement. This has triggered immediate repayment of one of Hongqiao's $700 million loan. Given Hongqiao's current financial state, it is in no position to repay this loan. As a result, the Chinese Government through three SOCB banks, Bank of China, ICBC and the Agricultural Bank of China granted Hongqiao additional lending and/or guarantees to stave off Hongqiao's US$700 million default. Additionally, China's Ministry of Propaganda has issued a directive to all China's major media outlets prohibiting any mention of Hongqiao.
"Once again, the Chinese Government is not allowing market forces to rationalize its excess and uncompetitive capacity, China continues to prop up its aluminum industry, as evidenced by its latest bailout of the largest aluminum producer in China," remarked Mark Duffy, Executive Director of China Trade Task Force. Mr. Duffy concluded by noting that "the Trump Administration needs to push the WTO case forward, as this is the only vehicle that will force the Chinese to curtail its excess aluminum capacity and finally put thousands of American aluminum workers first."
About China Trade Task Force:
The China Trade Task Force (CTFF) is committed to supporting and saving tens of thousands of American jobs. The U.S. aluminum market directly creates more than 10,600 American jobs, indirectly supports tens of thousands more jobs, and contributes more than $6 billion in U.S. economic output each year. China is targeting American workers by providing illegal subsidies to Chinese state owned aluminum producers. For more information, please visit us online at http://chinatradetaskforce.com/
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SOURCE China Trade Task Force