Find below a terrific little note from NAB giving a potted history of the Chinese steel sector. Brief and very useful backgrounder.
China’s steel industry is the largest in the world and a key consumer of Australian commodity exports. The industry has been suffering in recent times due to excess capacity, weak profitability and its role in the air pollution crisis, prompting Government plans to rationalise the sector and demolish plants. However the steel industry’s importance in localeconomies means that achieving this goal is easier said than done.
A brief history of China’s steel industry
The steel sector was seen as a critical source of developmentin the early years of the People’s Republic. In 1949, the country had 19 steel mills and 7 blast furnaces. Steel output for the year was 158 000 tonnes, six times below the level in 1943 under Japanese occupation (Reuters). China’s close relationship with the USSR brought financial aid and Soviet engineers to guide industrial development. Duringthe first Five-Year Plan (1953-1957), the steel industry received 14% of total investment, and output rose from 1.3 million tonnes in 1952 to 5.9 million tonnes by 1958. Coal and iron ore output were also key areas of growth.
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
