China's unprecedented economic growth machine relies overwhelmingly on an export-driven model that is fueled by numerous governmental policies which give certain industries including the stainless steel industry an unfair edge in the world marketplace, according to remarks made today by David A. Hartquist.

Hartquist, who serves as general counsel to the Specialty Steel Industry of North America (SSINA), identified China as a threat to the economic stability of the international stainless steel market and the financial viability of U.S. stainless steel producers. "While there is no crisis today in the U.S. specialty metals industry, there could be if the White House and Congress do not act soon and specifically focus on China's trade practices," Hartquist warned.

Policymakers in Beijing, as well as provincial and municipal government officials, actively promote the stainless steel and other "pillar industries" by providing numerous forms of direct and indirect financial assistance. China's banks are state-owned or state-affiliated and lend money at low rates to state-owned or state-influenced companies. Those companies sell their goods overseas, at prices kept down by a Chinese currency that Beijing keeps deliberately and artificially undervalued.

Hartquist provided specific examples of how China's stainless steel industry has benefited from such preferential industry programs and pointed to 2006 as a watershed year when China became the world's largest producer of stainless steel, increasing output more than 60 percent or three million tons. "It's only a matter of time before all this new Chinese capacity, purportedly built to service the growing Chinese market, ends up being dumped into world markets, with Chinese government support as the Chinese economy begins to slow," Hartquist said.