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(Con) A2: BRI Key to China Steel Exports

Turn – Ore prices

(a) Lower China steel demand lowers ore prices

Hoyle, 9-3, 19, https://www.wsj.com/articles/chinese-steel-slowdown-slams-iron-ore-prices-11567505144, Wall Street Journal, Chinese Steel Slowdown Slams Iron-Ore Prices

Iron-ore prices posted their biggest one-month fall in almost eight years as China’s huge steel engine cools and global shipments of the commodity rise.

(b) Lower ore prices boost the US steel industry

Hoyle, 9-3, 19, https://www.wsj.com/articles/chinese-steel-slowdown-slams-iron-ore-prices-11567505144, Wall Street Journal, Chinese Steel Slowdown Slams Iron-Ore Prices

Iron ore’s drop, however temporary, offers some relief for steelmakers, which were grappling with sharply higher prices for the raw material at a time when steel prices were softening. U.S. Steel recently said it was struggling with rising raw-material costs in Europe as it idled one furnace on the continent and two in the U.S.

© Strong steel industry key to the US economy

American Institute of Steel, 2019, https://www.steel.org/economicimpact

According to a recently released analysis, the American iron and steel industry is a dynamic part of the U.S. economy, accounting for more than $520 billion in economic output and nearly two million jobs in 2017 when considering the direct, indirect (supplier) and induced impacts. These workers earned over $130 billion in wages and benefits. All told, the industry generated $56 billion in federal, state and local taxes.

Turn – Chinese steel exports undermines the steel industries in other countries, and Europe will actually block China’s steel exports

Sarma, 8-28, 19, https://www.orfonline.org/expert-speak/what-will-happen-to-chinese-steel-after-trump-tariff-54842/, What will happen to Chinese steel after Trump tariff?

However, there is an apprehension about China dumping steel into these developing countries. These countries are likely to experience a surge in steel imports. For example, steel imports into India surged 67% in April-May as a result of diversion of steel supplies internationally. Other countries have started imposing safeguard or retaliatory measures to protect domestic producers. For instance, the European Union has approved safeguard measures on steel due to a surge in steel imports.

Turn – China needs to downsize surplus in its steel production to modernize its economy and reduce pollution

Sarma, 8-28, 19, https://www.orfonline.org/expert-speak/what-will-happen-to-chinese-steel-after-trump-tariff-54842/, What will happen to Chinese steel after Trump tariff?

On the supply side, China is looking to curb its excess steel capacity. According to the Supply-Side Structural Reforms (SSSR) released in late 2015, China aims to modernise the steel production and reduce the excess capacity in steel industries within the next three to five years by 100-150 million tons. This was on account of excess capacity that affected corporate profitability, as well as an effort to implement tougher environmental measures to curb pollution. China has shut more than 150 million tonnes of steel capacity in the past three years as part of a campaign to modernise its economy.

China will just stimulate its economy to solve the impact

Reuters, 9-6, 19, https://www.reuters.com/article/us-china-economy-rrr-cut/china-cuts-banks-reserve-ratios-frees-up-126-billion-for-loans-as-economy-slows-idUSKCN1VR13X

BEIJING (Reuters) – China’s central bank said on Friday it was cutting the amount of cash that banks must hold as reserves for the third time this year, releasing 900 billion yuan ($126.35 billion) in liquidity to shore up the flagging economy. A China yuan note is seen in this illustration photo May 31, 2017. REUTERS/Thomas White/Illustration – RC1328606240 Analysts had expected China to announce more policy easing measures soon as the world’s second-largest economy comes under growing pressure from escalating U.S. tariffs and sluggish domestic demand. The People’s Bank of China (PBOC) said it would cut the reserve requirement ratio (RRR) by 50 basis points (bps) for all banks, with an additional 100 bps cut for qualified city commercial banks. The RRR for large banks will be lowered to 13.0%. The PBOC has now slashed the ratio seven times since early 2018. The size of the latest move was at the upper end of market expectations, and the amount of funds released will be the largest so far in the current easing cycle.

NU – Democrats want changes to the actual agreement

Mark Dorenkamp, 9-6, 19, https://brownfieldagnews.com/news/mckinney-concerned-lawmakers-want-to-reopen-usmca/, MCKINNEY CONCERNED LAWMAKERS WANT TO REOPEN USMCA

The USDA Undersecretary for Trade is concerned that some lawmakers are seeking significant changes to the U.S. Mexico Canada Agreement. On a conference call with reporters during a trade mission to Canada, Ted McKinney says it would be very difficult to reopen the agreement. “I’m not intimately familiar with it, but sometimes there are things I think called side letters, or other ways to address unanticipated questions or demands.” Speaker of the House Nancy Pelosi recently told Canadian Prime Minister Justin Trudeau Democrats are especially concerned about enforcement of USMCA. “The hope is that if there are needs, clearly Ambassador Lighthizer and his team are attempting to address those.” McKinney says Canadian officials he’s spoken with on the trade mission are curious about how the ratification process is going because Canada won’t take up the Agreement until it’s approved by the U.S. Congress.

BRI won’t solve overcapacity problems

Tom Holland, 2016, https://www.scmp.com/week-asia/opinion/article/1999544/why-chinas-one-belt-one-road-plan-doomed-fail, August 6, South China Morning Post, Why China’s ‘One Belt, One Road’ plan is doomed to fail

All the signs are that China’s One Belt, One Road plan will similarly fail in its main objectives. First, the idea that infrastructure projects in Central and South East Asia could absorb a sizeable portion of China’s excess industrial capacity is simply unrealistic. Consider steel. Currently China’s steel mills can turn out some 1.1 billion tonnes of the metal annually. Yet even with economic stimulus efforts in full swing, no one expects domestic demand to exceed 700 million tonnes this year. It is hard to imagine China building enough roads, ports and pipelines across Asia to use up the extra 300 million tonnes of capacity, especially when you consider that the World Steel Association forecasts demand in the European Union, the world’s largest economy, to be just 150 million tonnes this year. China’s one belt, one road initiative set to transform economy by connecting with trading partners along ancient Silk Road Beijing could try. But if it did, it would run into another problem. Asia needs infrastructure development, but the region’s capacity to absorb new projects is limited. As China has learned at home, building a new high speed rail line or state of the art airport is easy enough given plentiful funding. But building a high speed rail line that is economically viable is altogether more difficult. Inevitably, if Beijing attempts to pursue projects at a pace and in a number sufficient to make a dent in its excess capacity, it will end up building white elephants, wasting money, and encouraging corruption on a scale never before seen. China’s one belt, one road plan covers more than half of the population, 75 per cent of energy resources and 40 per cent of world’s GDP.

BRI won’t solve overcapacity problems

Tom Holland, 2016, https://www.scmp.com/week-asia/opinion/article/1999544/why-chinas-one-belt-one-road-plan-doomed-fail, August 6, South China Morning Post, Why China’s ‘One Belt, One Road’ plan is doomed to fail

All the signs are that China’s One Belt, One Road plan will similarly fail in its main objectives. First, the idea that infrastructure projects in Central and South East Asia could absorb a sizeable portion of China’s excess industrial capacity is simply unrealistic. Consider steel. Currently China’s steel mills can turn out some 1.1 billion tonnes of the metal annually. Yet even with economic stimulus efforts in full swing, no one expects domestic demand to exceed 700 million tonnes this year. It is hard to imagine China building enough roads, ports and pipelines across Asia to use up the extra 300 million tonnes of capacity, especially when you consider that the World Steel Association forecasts demand in the European Union, the world’s largest economy, to be just 150 million tonnes this year. China’s one belt, one road initiative set to transform economy by connecting with trading partners along ancient Silk Road Beijing could try. But if it did, it would run into another problem. Asia needs infrastructure development, but the region’s capacity to absorb new projects is limited. As China has learned at home, building a new high speed rail line or state of the art airport is easy enough given plentiful funding. But building a high speed rail line that is economically viable is altogether more difficult. Inevitably, if Beijing attempts to pursue projects at a pace and in a number sufficient to make a dent in its excess capacity, it will end up building white elephants, wasting money, and encouraging corruption on a scale never before seen. China’s one belt, one road plan covers more than half of the population, 75 per cent of energy resources and 40 per cent of world’s GDP