Beijing pulled out all of the stops to ensure smooth and pleasant G20 proceedings in the eastern city of Huangzhou. Security was reportedly tight as a drum. The locals were given a "seven-day public holiday" and encouraged to clear out of town, and factories in the vicinity were temporarily shuttered to improve air quality during the summit.
Reportedly among those factories were a few dozen regional steel mills.
Oddly enough, permanently closing steel mills in China is exactly what many G20 states would welcome, particularly after a meeting that bore few significant policy developments. The massive Chinese steel industry has been the target of a lot of scrutiny in recent years. It has experienced a breakneck expansion since 2000 when it had an annual production capacity of 150 metric tons (MT). By 2015 it had grown to 1,140 MT.
That capacity expansion and China's tendency to use it, regardless of market direction, has made it responsible for the lion's share of the world's steel overcapacity problem. A lot of bankruptcies and layoffs around the world have their roots in recent waves of artificially cheap steel from China.
The numbers are truly staggering. A new paper from the Duke University Center on Globalization, Governance & Competitiveness notes China's production capacity increase since 2007 is equivalent to seven times the United States' total steel production in 2015. Some of this Chinese production has fed into its massive infrastructure and construction projects.
But let's get real; most of it has been led along by a system of state capitalism that provides mills with free land, low-cost loans, and sometimes outright subsidization, among other forms of financial support. Nearly all of the Chinese steel industry's major players are state-owned enterprises.
That state-owned reality means production doesn't slow down as much as it should when the economy cools, often despite financial losses. Mills continue to pay their taxes, and millions of Chinese workers stay employed, which is important for the country's internal stability. But this has left the world awash in steel that no one asked for, and steelworkers everywhere out of jobs – nearly 15,000 of them in America alone.