Downsizing in China's steel industry could spark social unrest

The downsizing of China's massive metallurgy will not happen fast enough for the rest of the world, it will take years for steelmakers to feel relieved. The cut in capacity of China's steel industry is the largest industrial restructuring ever to take place in the world.

For most of the globe, this will bring relief for metallurgists, but negatively affect the workforce in China. One of the first regions in China where capacity will be cut is the Tangshan region. A third of its production is to be cut next year. Tangshan produces more steel than the United States. And villages across the area have already felt the transformation of economic activity.

The privately-owned Songting plant closed last November, resulting in about 7,000 workers losing their jobs. Lun Zheng, who worked at the plant for eight years, says the plant owes him seven months' wages. Like many other villages, his village was tied to the incredible growth of China's steel industry, which expanded 12 times between 1990 and 2014. “The steel plant took over all the land in our village. We have no income, how can we live? ”He says.

The Chinese authorities said 400,000 people are expected to lose their jobs, but other analysts put the figure closer to 2 million jobs. Regardless of the number, the Chinese authorities are not afraid of massive unemployment and subsequent social unrest.

In an attempt to prevent this, they will prolong the slowdown for several years, cushioning the blow by prolonging the operation of inefficient state-owned metallurgical plants operating at a loss. And this is not very good for global markets, thanks to dumping, China will continue to dump a record amount of cheap steel onto the market.