Can Beijing bear to let its prized steel industry shrink so the rest of the economy can grow?
Illustration by Luis Grañena.
In December 2020, as the first year of the Covid-19 pandemic drew to a close, Chen Derong wiped away tears of joy while addressing the company he chairs, China Baowu Steel Group Corporation.Baowu is the result of a consolidation of the steel industry with Baosteel and Wuhan Iron & Steel merging, along with Ma Steel. State-owned Baowu had just cracked a major milestone: It had churned out its 100 millionth tonne of steel that year, cementing its lead as the world’s largest steel producer. Chen, a former engineer, reportedly called it a “dream come true.”
Backyard furnaces producing steel during Mao's Great Leap Forward. Credit: Wikimedia Commons
In a year when the pandemic slowed global steel output, Baowu was thriving. Beijing had wheeled out its stimulus playbook, announcing government spending plans worth hundreds of billion dollars and looser borrowing requirements for local governments, with both measures supercharging steel-hungry infrastructure investment. B
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