China’s vast steel industry is a major target of President Trump. But this hulking shell of a mill here shows why China is likely to keep pumping out more and more steel, inflaming trade tensions between the two countries.
The Hangzhou steel mill, a vast labyrinth of blast furnaces, warehouses, chimneys and worker dormitories covering hundreds of acres, was one of Mao Zedong’s favorite projects. Built in just 13 months in the late 1950s, it once employed 25,000 workers.
Pollution and the march of progress made the mill a liability. But closing a mill eliminates well-paying jobs – a central reason China keeps factories churning out steel the world doesn’t need.
When authorities do manage to shutter a plant, it is a costly ordeal, as the story of Hangzhou shows. With the help of a $34 million grant from government officials, the Hangzhou plant owner, Hangzhou Iron and Steel Group, offered the 12,000 remaining workers lavish severance benefits and pensions.
“I don’t have to wake up early,” said Tang Guomin, 49, who had labored at the blast furnaces since he was 18 years old. He received nearly six years’ pay from the company as severance and when he turns 50 in a few months, he will be able to collect an inflation-adjusted pension from the government equal to 90 percent of his previous pay for the rest of his life.
“I sleep till I wake and don’t have much to worry about,” he said, while doing his family’s morning vegetable shopping at a street market. “I miss the factory, but that time won’t be back again.”
Invoking an obscure trade law, President Trump signed an executive order on Thursday for a 270-day review to determine whether steel imports were harming national security.
If the Commerce Department does find harm, Mr. Trump will have up to 90 days to decide whether to impose broad import restrictions. China is an obvious target of the order, though the impact could ripple worldwide.
While only about 2 percent of American steel imports come directly from China, global steel makers and industry experts blame China for shipping its surplus steel to other countries, which drives down prices and prompts those countries to further process the steel into high-value products for export to the United States.