Excess industrial-production capacity is a global issue that has depressed international commerce and harmed workers, trade ministers from the Group of 20 industrial and developing nations said Sunday after meeting in China.
The declaration cast a spotlight on China’s influence as the world’s largest exporter of manufactured goods such as steel.
The Shanghai meeting sought to address what the host, Chinese Minister of Commerce Gao Hucheng, called a “very sluggish recovery” marked by growing protectionism, reduced foreign direct investment and other signs of fragmentation in the global trading system that together risk making 2016 the fifth-straight year that international commerce lags behind global growth.
Mr. Gao told reporters that China had made trade negotiations a key plank of its G-20 presidency this year, and that trade ministers over the weekend agreed to a nine-point set of principles aimed at spurring cross-border investment.
“We do have the responsibility to stimulate trade and investment as a contribution to a new vitality to the world economy,” he said.
The reference to excess capacity in the weekend’s closing statement stopped short of pinning the blame on any specific nation. It does, however, add a new layer of international pressure on China.
Almost 15 years after China joined the World Trade Organization, many of its global trading partners want Beijing to deal more effectively with its high production of steel, aluminum, chemicals, cotton and polyester, which runs ahead of demand and is flooding markets overseas.
The only industry the statement specifically described as experiencing excess capacity was steel. However, a key complaint by the U.S. and Europe is that China’s steel output?which accounts for about half of global production?is being dumped on world markets at below costs.
“We recognize that excess capacity in steel and other industries is a global issue which requires collective responses,” the statement said.
The trade ministers didn’t agree to any particular remedies, saying that “G-20 steelmaking economies” intend to join a coming industry meeting and will consider forming a formal mechanism for sharing information.
A month ago in Beijing, the bilateral U.S.-China Strategic and Economic Dialogue used almost identical language by describing overcapacity as an international issue.
U.S. Trade Representative Michael Froman said Sunday’s statement was “an important step in the right direction.” He said “the G-20 has added to the chorus of voices calling for tackling the root causes of excess capacity for the benefit of both developing and developed countries.”
Mr. Gao, in zcomments to the media Sunday, said little about overcapacity, but acknowledged steel production had risen to a level that constitutes a G-20 concern.
The trade ministers met against a backdrop of slowing global commerce and rising protectionism, as well as anxiety over the U.K.’s plan to leave the European Union and November’s U.S. election, in which both prospective party nominees have withheld support for some trade agreements. Neither Brexit nor U.S. politics was cited in the 16-page final statement, though the G-20 members said they must “better communicate” benefits of trade and investment openness.
The WTO recently said that G-20 economies, in the half year to mid-May, had applied 145 new trade-restrictive measures, a record average of more than 20 a month, with many in metals and chemicals.
A sign of that friction flared Friday, just as the trade ministers readied to meet, when China’s Ministry of Commerce said it had asked the WTO to establish a panel it hopes would force U.S. to alter policy over a penalty called countervailing duties. Also Friday, the Geneva-based WTO published a new World Trade Outlook Indicator that pointed to expectations of further modest slowing of trade in the third quarter.
It isn’t clear how much progress on trade can be expected from the G-20, a group that gained prominence during the global financial crisis and includes economies from Canada to Indonesia.
“On the trade side, I don’t really see anything they can do,” said Alan Oxley, chairman of the Australian APEC Study Centre at Monash University.
The trade ministers’ meeting was a key preparatory session?as is a meeting of G-20 finance ministers in the southwestern Chinese city of Chengdu in two weeks?for a Hangzhou leadership summit in September, at which China is pushing a theme of “innovative, invigorated, interconnected, and inclusive.”
International trade will remain on China’s agenda this week. Beijing will host EU leaders, who it hopes will agree to elevate dealings with China to market-economy status, which would make it more difficult for the trading partners to impose trade and investment penalties. Also this week, U.S. and Chinese officials will meet in Beijing for the latest round of talks over a three-year-old proposal for a bilateral investment treaty, including recent ideas from China about how to move forward.