Why is China Producing So Much Steel?

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[xeftones]

So roughly 70% of Chinese steel comes from Australian Iron Ore. Crazy, i work in Western Australia and didn't realise it was that high.

[FMJIRISH]

To dominate the market of a key military resource.

China is playing the long game and always has been

[xeftones]

Chinese steel worker earning $87, 000 a year 😂😂😂 Thats the biggest load of crap I've ever heard

[srtx]

Its not steel its called "chinesium"

[radiozelaza]

55% of GDP in government spending? I smell a huge bubble going to burst.

[Venezuelangel]

you mean like when Germany was producing metal alloys for "no" reason until Churchill's men realized they were using it to build a huge airforce just before WWII? Oh, just, you know, coincidences can be a thing...

[max__pain]

The wages in 2019 were 78, 147 yuan/renminbi, not dollars. That's about $11, 243 as of today.

[BlackSilver]

Why is China producing so much steel? Two reasons:
1. To keep the price artificially low, preventing other economies from being able to compete in the market.
2. To keep other nations dependent upon their production of an essential construction material.

[YizzTheEunuch]

China produces steel because they're building like mad. I have a friend who lives in China and he tells me there's always new stuff being built in his city. Literally every day there are construction projects buzzing around his city.

[kokofan]

One of the main reasons China’s belt and road initiative is to keep this insane construction industry going.

[WasLilChrisnowbigish]

They have completely destroyed the UK steel industry with their cheap and poor quality steel.

[jacobmatthews]

As a South African, I am SOOO PISSED that we export so much of our iron ore. We are taking away so many job opportunities from our own people.

[Skandalos]

Theyre spending their Dollars before they become worthless paper.

[luckyo]

This video gets a lot of basics wrong. Not unusual for those that aren't in engeering that has ever touched metallurgy, or assume that China is capitalist on systemic level and that purpose of capital is profit.

First the metallurgy. Making steel is extremely energy intensive. That "coal" part in the equation, cited as 25% is overwhelmingly metallurgical grade coal, burned to heat the furnace to extreme temperatures that you can't even hit on that scale with electricity today. SSAB is working on experimental electric powered furnace right now to make Swedish production less CO2 intensive. Their success has been a mixed bag so far. Most people forget that heating iron ore to necessary temperatures to manufacture genuinely high grade, high purity steel has been one of the primary reasons why weapons kept changing for last few millenia. It's a genuinely hard engineering problem to solve, even today. And as we burn that high grade metallurgical coal, carbon aspect of it goes airborne in the exhaust and mixed with the iron ore via specific techniques that attempt to address the problems such as uniformity and correct numbers to create specific grade of steel. There are many ways of doing this, depending on specific grade of steel you're making, and "portion of energy cost as related to manufacturing steel" has significant dependency on

The second part which is fundamentally wrong is assuming that "capital in China is there to produce profit" and that "Chinese steel workers are more efficient". Both are fundamentally wrong. In China, profit is borderline irrelevant for the state. The primary purpose of usage of capital to fund production is a state sponsored job program, as a part of political pacification strategy. To put it simply, people who have work don't have time to protest. CCP would know, as their own rise to power happened on a back of a massive protest march of dissatisfied workers.

This leads to capital being generated by exports coming primarily from Shanghai municipality and Guangdong province, which generate hard currency, which is leveraged to fund state fractional banking system, which dispenses loans to the rest of the country on "who can generate most jobs" basis. Profit is simply irrelevant in this calculus. If you can have people reliably employed, Chinese system will finance you. That's where both Inner Mongolian steel industry and that massive infrastructure sector come from. And that's why China is by far the most indebted nation on the planet. And that is why if you were to "make Chinese steel worker more efficient", you'd likely get purged for a political crime. Which that would be.

Finally, one should remember that Chinese steel industry sits mostly in Inner Mongolia, which is one of the poorest provinces in China. "Average factory worker salary" is going to be massively influenced by Guangdong and Shanghai numbers, where people do indeed make wages that typically equal and exceed even Western wages. But China is one of the most unequal nations on the planet today. People in Inner Mongolia still live in what would be deemed poverty by Western standards. And their salaries are nothing like salaries for Guangdong and Shanghai residents, because their cost of life is a tiny fraction. Again, this is a problem with Westerners assuming certain things from their life experience, and projecting it. In China, there's no freedom of movement, or freedom of choice of place to live. If you have a permit to live in Inner Mongolia, you cannot just go to Shanghai or Shenzhen and live there. That's illegal. Millions still do it to do the most menial jobs, and they get deported as a matter of routine.

[marhobane]

I keep telling people this is a house of cards, but I never hear the end of it from sinophiles.

[animewatch]

China spends around 3.5 Trillion USD in 2019 on Infrastructure. They are planning to plan 7 Trillion for 2020 to stimulate the economy against COVID recession. Infrastructure stimulus is much better than the negative interest rate and PPP loans.

[qinby]

*_"Why is China Producing so much steel?"_*
*Well China use around half of all steel in the world, so if they did not produce it they would not have it*
Pretty simple

[GrewWheat]

What is wrong with this? Most primary industries in China have been state owned since the beginning. Even if it is financed by debt, the debt is backed by physical things which will be used by people in the future.

[jimtaylor]

Partial answer: It's all one absurdly huge Make Work scheme, like that done in Ireland in the 1800's, Germany in the '30's, and the UK in the '70's.

The end result is always immense waste for short term gain, and roads [proverbial or literal] that lead to nowhere.

[aaronspain]

So China sells $50BN worth of steel every year, buying over $60BN worth of raw materials from Why can't Australia become the global foundry for steel? $85, 000 is more than most Australians make in a year, so it's not a labour cost issue!