Today\'s Wall Street Journal Headlines read; \"China Plans to Cut Steel Capacity
ID: 1135922 • Letter: T
Question
Today's Wall Street Journal Headlines read; "China Plans to Cut Steel Capacity"
Beijing-China economic planning agency pledge to continue its push to cut overcapacity in some industrial sectors, aiming at reducing steel production capacity by around 50 million metric tons and coal by at least 150 million tons this year. Last year, the government cut steel overcapacity by 45 million tons and coal 250 million tons. The government also aims to realize 9% growth in fixed-asset investment this year, the National Development and Reform Commision said in a report delivered at the National People's Congress.
Provide in a short answer of a possible reason and impact on the US Economy.
Explanation / Answer
Following are possible reasons for such steps:
Impact on USA:
Such move by the Chinese government would most probably deliver positive outcomes to USA. Fall in output of steel will invariably lead to rise in price of steel in international market. Now demand for Chinese export will witness significant fall in days ahead. Thus, demand for domestic steel in US might pick up thereby leading to revival of steel sector and job market.