Protectionism will only hurt Sino-US ties

At the eighth China-US Strategic and Economic Dialogue in Beijing in June, a dispute over steel trade became a very thorny issue. China is now the biggest steel producer and exporter in the world, with its crude steel production capacity being 1.13 billion tons, which accounts for nearly half of the world's total. US Under Secretary of Treasury Nathan Sheets alleged China's excess steel capacity was having a huge impact on the United States, Europe and other markets. And US Secretary of Commerce Penny Pritzker has levied an astonishingly high tariff of 522.2 percent on Chinese steel.

The US accusation is unfair, because China's 4 trillion yuan ($601 billion at current rates) after the global financial crisis boosted the growth of industries such as steel, cement and electrolytic aluminum, and helped it contribute up to 50 percent to global economic growth from 2009 to 2011.

Sluggish global demand has aggravated the excess steel capacity problem despite China making tremendous efforts to reduce its steel production - for example, its steel output fell by 90 million tons last year. And since more than half of China's steel producers are private companies, it cannot just tell them to cut their outputs. To reduce steel production, it has to implement stricter eco-norms and formulate supportive fiscal policies to deal with the mass layoffs of workers.