An empirical exploration of Chinese imports and the US steel industry

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International Journal of Trade and Global Markets, ISSN: 1742-755X, Vol: 9, Issue: 3, Page: 272-285

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Myeong Hwan Kim; Carolyn Fabian Stumph; Yongseung Han
Inderscience Publishers; Inderscience Enterprises Ltd.
Economics, Econometrics and Finance; Business, Management and Accounting; Economics
article description
The paper identifies four key issues concerning the relationship between Chinese imports and the US steel industry: currency manipulation, state-owned enterprises, subsidisation, and environmental regulations. Given these issues, we run a regression to empirically explore the relationship between Chinese imports and US steel prices. We found that Chinese imports have two conflicting effects: one is to lower US steel prices while the other is to increase the prices via China's increasing market share. The overall impact is that Chinese imports increase US steel prices, as the effect due to market share is larger than the demand effect. With these findings, we suggest that, of the four effects considered, Chinese subsidisation is the most crucial.