The effect of overcapacity in steel industry on antidumping actions against China

Abstract

This paper presents an empirical study on the impact of the world overcapacity in the steel industry on antidumping (AD) actions against China. The study aims to analyse this effect since the 2000s when China tremendously expands its steelmaking capacity which is believed to negatively cause a considerable increase in the world unutilized capacity or overcapacity. It finds that there is a positive and significant relationship between the volume of steel excess capacity and the number of AD actions against China in this sector. The study further analyses this the linkage in different angles including development level of countries and combining with free trade agreement (FTA) effect. The result reveals that industrializing countries shows a more statistically significant evidence in terms of being more sensitive to file AD actions against China than developed counterparts. However, the imbalanced division of the data into two groups may affect this result. Moreover, China non-FTA partners show statistically significant effect while FTA partners seem to be more cautious to take AD actions against China with less statistical significance results. The study ends with some policy recommendations to reduce the Chinas rampant expansion in the steel industry and suggestions to enhance the effectiveness of AD under the WTO to deal with this problem.