Global forum to tackle steel glut sounds good on paper, but can it work?

Trade rows arising from excess industrial capacity are expected to continue to flare as a global forum recommended by the Group of 20 leaders will likely fail to tackle the root of the issue, experts say.

China has been blamed for flooding global markets with cheap steel, threatening jobs in the United States and Europe.

World leaders attending the two-day G20 summit in Hangzhou that wrapped up on Monday agreed to work together to tackle the issue. But a communique released after the meeting did not single out China and avoided introducing binding limits.

Instead, it called for increased information sharing and cooperation through the formation of a global forum on excess steel capacity. The forum would be facilitated by the Organisation of Economic Cooperation and Development (OECD). But China is not one of the 35 formal members of the Paris-based group.

“A global forum in the OECD is just like opening a back door to China and granting it leeway and space to manoeuvre, which will give birth to more trade frictions in the future,” said Yuan Gangming, an economist at Tsinghua University.