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China to spend $6bn to gird steel sector for WTO

BEIJING: The Chinese government will spend more than 50 billion yuan ($6 billion) to prepare its giant but backward steel sector for China's entry into the World Trade Organisation (WTO), a state-run newspaper said on Sunday.

The funds, more than half of which will be low-interest bank loans, would be used for technical renovations to raise the quality of China's steel before WTO entry brings down tariffs and other protection, the China Daily Business Weekly said.

The official newspaper said 42 Chinese steel firms would be beneficiaries of the state plan, with Baoshan Iron and Steel Group, Anshan Iron and Steel Group, Capital Iron and Steel Group and Wuhan Iron and Steel Group topping the list.

The government sought to transform the big four, which accounted for 70 percent of the sector's profits in 1999, into "strong competitive conglomerates able to deal with fierce international competition", the Business Weekly said.

The goverment investment scheme, to run for the next several years, would focus on upgrading 13 categories of special steel products in high demand, it said.

The products included steel plates for cars, containers and electrical appliances and hot- and cold-rolled thin plates for petroleum pipes and expressways, it said.

China's accession to the WTO, which the government hopes to complete this year after 14 years of negotiations, would remove non-tariff barriers and cut steel tariffs to eight percent from the current 10 percent by 2005, the newspaper said.

State media quoted industry oficials as saying steel ouput would be reduced by 10 percent from 1999 to under 100 million tonnes to help prices recover from years of glut.

Last year prices on China's steel product market fell by more than 150 yuan ($18) per tonne because of oversupply, the reports said.-Reuters