Washington DC [US], November 5 : The leadership of the Select Committee on the Chinese Communist Party (SCCCP) has called on the US Secretary of Commerce, Gina Raimondo to take urgent action to address the harmful effects of China's industrial overcapacity and the dumping of goods into American markets.
The letter underscores the growing economic threat posed by Chinese overproduction, which lawmakers argue has created unfair competition, destabilized domestic industries, and eroded market share for the American manufacturers.
Lawmakers also urged the Department of Commerce to more aggressively apply existing trade laws, specifically recommending the use of special cost adjustment rules under 19 USC 1677b(f)(1)(A) in antidumping investigations.
This provision allows the Department of Commerce to adjust the reported costs of foreign producers whose pricing practices are distorted by overproduction and government subsidies, particularly from China.
The letter highlights the epoxy resin industry as a key example of how overcapacity and dumping are undermining American industries. Between 2021 and 2023, foreign epoxy resin producers, including those from China, India, South Korea, Taiwan, and Thailand, experienced a significant decline in production capacity utilization while continuing to expand their production capacity. The resulting surplus has flooded the American market with underpriced goods, harming American manufacturers and eroding their competitiveness.
Foreign producers, particularly from China, are facing overcapacity in the epoxy resin sector, prompting continued production despite weak demand. This has led to a projected 22 per cent increase in production capacity by 2025.
To manage the surplus, foreign producers are increasingly relying on the US exports, with imports of epoxy resins rising from 8.4 per cent to 10.3 per cent between 2021 and 2023. This influx of lower-priced goods has not only pushed down prices in the U.S. market but also reduced U.S. export prices, further straining domestic producers.
As a result, American manufacturers are facing shrinking profit margins, with declining operating income, net income, and operating margins between 2021 and 2023. Lawmakers also argue that China's overproduction, combined with government subsidies and pricing manipulation, has distorted global supply chains and created an unfair competitive environment.
They believe that stricter enforcement of U.S. antidumping laws, including the application of cost adjustment rules, is essential to levelling the playing field for American industries. In closing, lawmakers urged the Department of Commerce to take swift and decisive action to counter China's trade practices, warning that failure to address the issue could further harm American manufacturers and workers, particularly in industries like epoxy resins and other chemicals vulnerable to overcapacity and dumping.
The letter reflects growing bipartisan concerns over China's trade practices and their impact on American industries. As global trade tensions rise, policymakers are under increasing pressure to protect domestic industries from unfair competition.