Reporter "Harassed" By Police After Exposing China's "Dirty" Steel Secret

While the whole world is up in arms over Trump's trade tariffs, virtually nobody wants, or dares to, point out that Trump is actually spot on when slamming China's trade practices. And for confirmation, look no further than China's own behavior when caught in the act.

As a reminder, it all started in December 23, 2015 - which we said at the time was "the date the global trade wars officially began" because that's when president Obama imposed a 266% tariff on Chinese cold-rolled steel imports which Beijing had been quietly dumping around the world, a consequence of China's attempt to overstimulate its economy (capex, capex, capex) starting in 2014.

To be sure, with Chinese mills, smelters and refiners all producing far more than can be purchased domestically amid slowing domestic demand, as well as the government's anti-pollution crackdown, China's decision to ship the excess overseas, and the dump it at far below prevailing prices, was understandable.

As was the collective global response: it wasn't just the US that slapped China with tariffs: so did the EU, which as we reported two days ago, just extended its Chinese steel pipe tariffs of 72% for another 5 years.

What China did in response was, well, lie.

Beijing government swore that it would cut production and slash capacity in response to the global trade war-esque retaliation. It did not, as we first reported one year ago in "Iron Ore Tumbles As China Steel-Producing Hub Found Lying About Production Cuts." Some more details:

In 2016, China’s state council set out plans to eliminate 100 -150 million tonnes of steel capacity in a bid to restructure the economy from one driven by government-led infrastructure investment and exports to a more consumption and services-oriented model. Last January, the hub of China's steel production -  the northern province of Hebei - announced it would cut output to ease pollution and help curb oversupply. Hebei said it planned to reduce steel output by 8 million metric tons in 2016, its Governor Zhang told local lawmakers, while Iron ore production would be cut by 10 million tons.

More than one year later, it appears that Governor Zhang lied about Hebei's intentions, and according to a provincial notice by the Chinese province, it has emerged that China's compliance with its own mandatory production cuts has been "problematic."

Subsequent reporting by Reuters  found that the same Hebei province, China's biggest steel-producing area, launched a probe into steel overproduction in the city of Tangshan "amid concerns that firms have continued to raise output despite mandatory capacity cuts."

Tangshan is the heartland of Chinese steel production. The city is home to the headquarters of the state-owned Tangsteel Group, which in 2006 merged with other companies to form Hebei Steel Group, the second-largest steel producer in the world. Located around 100 miles east of the capital Beijing, Tangshan is on the frontline of the country's "war on pollution", and was seventh on the list of China's ten smoggiest cities in the first two months of this year.

Having been exposed to the entire world for lying about its production cuts, China's central government then "ordered" the investigation of firms in Tangshan that have "restricted but not cut production, restricted production but not actually cut emissions, and cut capacity but actually increased output.  Investigate and punish, that is.

Or at least that was the not so sophisticated charade staged by Beijing, because despite having been caught lying once already, China continued the theater. It had no choice: for one thing it had to allocate its trillion dollar stimulus somewhere, even if it meant keeping its zombie steel mills alive, and more importantly, China had to avoid the middle-class revolt that would follow if millions of steelworkers were suddenly laid off.

What's far worse: all of China's trading partners knew all about it.

* * *

Fast forward to today when CNBC's China reporter Eunice Yoon decided to check if Beijing had kept its promises that it was slashing steel production and excess capacity, by visiting a town that was reportedly "steel free."

What happened next, as Yoon reports, is that just as soon as she discovered a steel plant in a town that was supposed to be "steel-free", and that, drumroll, Beijing had lied once again, she was promptly escorted away by Chinese police as the local government had no interest in divulging to the world that as China was closing steel mills in one part of the country, it was quietly opening new plants in other parts of the country, or as she said: "Beijing may be reducing capacity here, but it's moving it elsewhere."

Yoon then adds: "the issue of closing steel mills is highly sensitive in China, and as evidence of this we were taken away by the police, we were harassed when we were reporting, and a lot of that is despite the fact that the authorities there were very proud of the fact that this was a "steel-free" town, they still took us to the police station, acknowledged that we were allowed to be there, and then escorted us all the way out of town."

Meanwhile, by literally shifting around production, China was keeping the same total excess steel production, which in turn leads to more dumping, and more foreign steelworkers losing their jobs, just so China can pad its goalseeked GDP and keep its own steelworkers happy, preventing a worker uprising.

Watch her report below:

CNBC reporter escorted out of 'steel-free' town in China from CNBC.


NoDebt nope-1004 Thu, 03/08/2018 - 16:06 Permalink

No wonder they just installed their Il Presidente For Life in China.  It takes a steady hand at the tiller to lie consistently and boldly.  Can't have different people bopping in and out of the top office every few years, one of them might slip up and say something not in agreement with the state narrative.

We're not the only country with a "deep state".




In reply to by nope-1004

NumbersUsa Laowei Gweilo Thu, 03/08/2018 - 19:34 Permalink

"On November 21, 1962, the Department of Justice ordered the AZC (AIPAC) to begin registering as an Israeli foreign agent. This touched off an intense battle between the Justice Department and the AZC which outlasted (KILLED) both JFK and RFK. The bloodied and bruised Justice Department hid away its files on the affair until they were finally declassified and released in 2008.

The effort to register Israel’s foreign agents clearly failed. Just 42 days after the Justice Department order, the American Israel Public Affairs Committee incorporated itself in Washington and took over the AZC’s functions. Since the year it was ordered to register—as part of the AZC—AIPAC has extracted an inflation-adjusted $250 billion from US taxpayers for its foreign principals. Influencing the conduct of US policy "by techniques outside normal diplomatic channels" has never stopped."

In reply to by Laowei Gweilo

fx NumbersUsa Fri, 03/09/2018 - 05:41 Permalink

anchor man: "does that happen often to you [getting escorted away by police]?

reporter woman: "Yes it does. especially at steel towns"


Now, that shill reporter woman supposedly was in ONE of these steel towns and then makes that kind of statement. CNBC, style...

Uh , and never mind that China is in fact closing the worst polluting plants and opening much cleaner ones at different places.

memo: reducing capacity actually may involve shutting down  a lot of factories and opening a few new, cleaner ones.

but yeah, these evil cheating chinese....

No question, there is lots of cheating going on over there. on all levels. local governments cheating bejing, bejing cheating the us, russia, everybody. the us cheating russia and china and vice versa.

Just that the american consumer would be outright shocked how high prices for almost all goods would be if they were made in usa instead of made in china, vietnam, india....


In reply to by NumbersUsa

TrajanOptimus fx Fri, 03/09/2018 - 08:56 Permalink

Time to get back to paying a higher price for a product that is going to last a long time rather than paying a cheaper price for shit that does not last.

Good Example, I buy CAT equipment. Its sinfully expensive compared to kabota and komatsu equipment made in Asia.

But the CAT equipment is easily twice the quality, lasts forever, has very little down time and can just take a beating. In the end it saves me money buying CAT because of lower operating costs and less down time waiting for parts and repairs.

You people just got used to buying cheap shit and forgot what it means to buy one item and have it for life.

My Griswald frying pan was owned by my grandmother, was purchased after WW2 ended and is still used today.

American made steel.

In reply to by fx

Kayman TrajanOptimus Fri, 03/09/2018 - 09:27 Permalink

I own nearly all Cat. But I do have a small Kubota excavator- good for small, occasional jobs.

But below D6 and 950 size machines, Cat has cheapened the product. Be careful. Cat hasn't gone whole hog into destroying its brand like a lot of other once great American brands (GE, Dewalt, the list is endless) but smaller Cat equipment is a lot closer to the poorer quality end of it's competition. 

In reply to by TrajanOptimus

Flybyknight NoDebt Thu, 03/08/2018 - 23:49 Permalink

At least the Chinese have a positive plan to maintain their economy as well as that of many other countries. (Australia exports iron ore to China in huge quantities) but I principally  mean the One Belt One road project that will generate economic growth throughout Eurasia. The USA seems hellbent on disrupting the OBOR and trying to maintain its status as World no.1 economy through military means. Trump appears to be battling the establishment in this regard and good luck to him even if his diplomatic style is unorthodox.

In reply to by NoDebt

Paul E. Math Justin Case Thu, 03/08/2018 - 22:29 Permalink

Steve Keene another good economist.

But I also wanted to explain what dumping is.  Because it's not clear from this article and the comments that the author or the readers understand.

Dumping isn't just making more steel than you said you would and then selling that steel.  That's not worth starting a trade war.

It's even ok for a company to sell steel for less than it costs to make it.  In a free market a company that does this will eventually go out of business so the problem takes care of itself.

But markets aren't free these days and what's wrong is a company that sells steel at less than production cost but doesn't go out of business because they are financially supported by their government.

Kinda like US banks and automakers during the Global Financial Crisis.

It's beyond time to end this corporate welfare.  There and here.

In reply to by Justin Case

Mr Drysdale new game Thu, 03/08/2018 - 19:33 Permalink

Not rumor, US steel to reopen "Granite City works" an Integrated Mill .

industry insiders thought that BOF would NEVER fire back up.

You don't just "fire it back up" either. I've heard up to 24MM$ will be spent before they roll the first bar.

Now you may think that USS's board is a bunch of "Knuckleheads", but being that they met with the President in the past few weeks, I think that "Somebody" knows that the Trillion dollar infrastructure program, using U.S. made steel is a 'go'.


In reply to by new game

lookslikecraptome Justin Case Thu, 03/08/2018 - 20:16 Permalink

I do not know about IBM. When did an economist say something that truly mattered? Business and finance escape 99% of economists. Not ragging on u. If economists knew more that the rest of the world they would be ungodly rich. Academia matters to science etc, not so much to money. Also, this writer needs an editor to teach real writing. What's with all the homey breathy adverbs and lippy loops ?

In reply to by Justin Case

ebear Mr Drysdale Thu, 03/08/2018 - 20:37 Permalink

Reopening an idled mill is not the same as installing new capacity.  Would you build a mill with a 10-15 year ROI based on the whim of a president who may only be in office one term?  What happens once he's gone?

Besides that, it would be suicidal to invest in anything but the latest technology, which is almost entirely automated.  Good for a few high tech workers, not so much for the blue collar guys.

Also, China's dumping of steel at low prices suggests weak global demand.  So, how does raising prices make weak demand go away? The only way you get around that is with a program that can absorb the capacity, such as a major infrastructure project.

I find it curious that Trump would suggest such a plan while at the same time raising the price of the inputs needed to execute it.  Considering the number of construction jobs that would be created, a few steel mill jobs seems a small price to pay.  Those guys are skilled workers anyway and can be retrained for jobs in construction.

Once demand for steel was up, based on the success of my infrastructure program, then I'd be looking at tariffs and switching to US sources, but only once I had a head of steam on the larger project and could afford to absorb those costs.

I would talk to the Chinese.  Tell them, look, we have the same problem you do, so we'll buy your steel at today's prices for the next five years, but after that, we're phasing you out.  Give them time to adjust, and if they can't do it, then it's on them.  No hard feelings.

So, all the cheap steel you could want for your project, leaving a larger portion of your investment for wages, plus savings that could be reinvested later in related industries, such as steel or electric power.

That's how I would do it.


In reply to by Mr Drysdale

TheReplacement ebear Fri, 03/09/2018 - 12:41 Permalink

Why would you try to induce increased domestic production after you have already used cheaper and inferior foreign production to build out your infrastructure.

Perhaps you are not considering what infrastructure means in this situation.  Perhaps infrastructure is the means to produce in the first place.  If that is the case then your plan would not be the way to go.

In reply to by ebear

ebear TheReplacement Fri, 03/09/2018 - 15:47 Permalink

"Perhaps you are not considering what infrastructure means in this situation."

I think this has already been defined in the context of what needs to be done: Roads, bridges, electrical, water and sewage systems, basically.  That's where the current focus is.

Industrial capacity, which is mostly private investment, would follow once the program was underway.  This is a project that will take at least a decade and billions of dollars to achieve.  In terms of domestic employment, you'd want to start right away, and at the lowest possible cost.  Or you could wait for private industry to respond and increase their capacity, which would have higher start-up costs and wouldn't generate as much initial employment.

I'm not just looking at the economic side, I'm also trying to see how it flies politically, considering that steel is very cheap now, and interest rates are very low.  If you can bring a particular project in at, say, 10B instead of 15 or 20, it's that much easier to get the funding approved.

As I said, later on you can switch to domestic suppliers as they get their act together and respond to the increased demand.


In reply to by TheReplacement

Kayman Justin Case Fri, 03/09/2018 - 09:42 Permalink


Economic opinions, like assholes, everybody has one.

So while you are wandering around Canada, stop at any metal fabrication plant and see what country's steel is being used. 9 times out of 10 it is Chinese (sometimes Korean).  Canada rarely uses Canadian steel. But Canada gets to export the steel products into the U.S. as "made in Canada".

Chinese oil jacks all over the oil pumping business in Canada- thousands of lost jobs in Canada and the U.S. for pig iron, poor quality jacks. Time for you guys to change "Canadian Tire" to it's correct name "Chinese Tire".

While you are at it, have you noticed the price of gypsum wallboard has more than doubled in Canada? That's the 150-230% tariff the Canadian government slapped on U.S. made product. Apparently higher prices in Canada are OK, but by some alchemy, higher prices in the U.S. are an evil thing. 

In reply to by Justin Case

roddy6667 nope-1004 Thu, 03/08/2018 - 21:09 Permalink

In the past two years, China closed many old, polluting steel factories to clean up the air.. They have also opened newer, more efficient mills. This all predates the tariff nonsense and is totally unrelated to it all.

These people who write these articles remind me of the three blind men who are describing an elephant. The man holding the tail says it resembles a rope. The man feeling the side says it resembles a rough stone wall. The third blind man is holding the trunk and claims an elephant is like a big hose. Each blind man is right about a small piece of the whole picture, but they are all wrong about the totality.

I don't know how the people who write comments on ZH fit into this analogy, but they are less informed than the blind men.

In reply to by nope-1004

Kayman roddy6667 Fri, 03/09/2018 - 09:48 Permalink

China wouldn't tolerate the majority of its steel being imported from foreign countries but thanks for the drive by shot.

The totality is China has been exporting cheap, usually highly inferior (quality) products for several decades now. It is the political strategy of a totalitarian, mercantilist state. A well-worn, beggar-thy-neighbor strategy of driving competing nations out of business and weakening their economies, while weakening their military strength.

In reply to by roddy6667

Zero Point Consuelo Thu, 03/08/2018 - 15:58 Permalink

Pfft. Fuck me with the "5000 year old culture" shit. Chinas culture is one of the youngest on earth, after the cultural revolution. Everything about it is experimental. Not one of you cunts has ever been to China I'd bet. When you travel there you notice quickly that NOTHING is old. Anything that might have been old, has been turned into some kind of China Disney version of the past. And the marked differences in behaviour by different generations of people there is fucking incredible.

In reply to by Consuelo

FreddieX Zero Point Thu, 03/08/2018 - 16:02 Permalink

Lying ! O.M.G. !…

OK, take illegal campaign donations from Gaddafi ( Sarkozy ), then kill him to cover it up.

And as an afterthought steal a few $billion.



"Flip" a foreign intelligence officer. Grant him asylum after he is caught and pardoned.

And, when the time comes and you need a sacrificial victim, kill him in a clownish and obvious provocation.

In reply to by Zero Point

Herp and Derp Zero Point Thu, 03/08/2018 - 16:23 Permalink

We are already at war with China, we are just too stupid to shoot back.

Shanghai and its burbs are amazingly modern and beautiful, much like new Arab cities.  Shenzhen as well.  They are likely going to be rundown shitholes in less than 20 years.  They can only build, not clean or maintain infrastructure.  The little old ladies clean the streets, but no one repaints, upgrades, or repairs the buildings.

China is a ticking time bomb of pollution and economic destruction.  Whether it is some long game to destroy capitalism or just the government is representing the Chinese man's small penis complex and huge overcompensating racial ego on a country scale, they are incredibly dangerous to trade with.

Any problems they have economically are deliberate.  When they get caught, they promise to prevent it while only enabling it further.  Their active trade and currency wars (real and virtual) are all a deliberate attempt to make China or the Chinese brother owner of as much of the world as possible.  They tax the shit out of imports, copy anything produced in their country or even near it.  They are colonializing the 3rd world and will keep it as they have no self-sabotaging white guilt BS.  Any tech or resources not in China, the country and business collude to purchase it or hack to steal it.

In reply to by Zero Point