U.S. Treasury Secretary Blames Excess Steel Capacity For Global Markets' Distortions

U.S. Treasury Secretary Jacob Lew blames the distortion in the global markets on excess steel production in China, according to an Associated Press report.

Lew "urged China on Monday to cut excess steel production, as the two sides opened a high-level dialogue overshadowed by tension over the South China Sea," reported the AP.

The United States and trading partners are blaming China for flooding "low-cost steel into their markets, threatening thousands of jobs." To counter the cheap steel influx, the United States has imposed anti-dumping tariffs, while European officials say they are looking further into the issue.

Related Link: The Market In 5 Minutes: Float Like A Butterfly, Sting Like A Bee

"Excess capacity has a distorting and damaging effect on global markets," Lew said. "And implementing policies to substantially reduce production in a range of sectors suffering from overcapacity, including steel and aluminum, is critical to the function and stability of international markets."

The AP said Chinese President Xi Jinping, while speaking at the event's opening ceremony, "promised action on reducing overcapacity but announced no new initiatives."

The report said, "The annual meeting of Cabinet-level foreign affairs, trade and other officials from both sides is meant to head off conflict. The sides also called for closer cooperation between the two biggest economies on climate, global finance, agriculture and other fields."