President Trump talked up his plans to help American coal and steel workers in his address to Congress.
“Dying industries will come roaring back to life,” he declared on Tuesday night.
As he was speaking, a top official thousands of miles away in Beijing was detailing China’s plans to cut half a million jobs in heavy industries this year.
That’s on top of 726,000 jobs that were axed in the coal and steel industries last year, said Yin Weimin, the country’s minister for human resources.
It’s all part of a plan announced a year ago to shed 1.8 million coal and steel jobs over a period of years as China tries to reduce excess capacity in industries dominated by bloated and inefficient state-owned enterprises.
The government is spending billions of dollars to help redeploy workers who are affected, Yin said.
In stark contrast, Trump reckons America needs more steel and coal.
In his address, he touted a directive that new American pipelines must be made with American steel and the removal of a regulation that he claimed threatened “the future and livelihoods of our great coal miners.”
But the big job cuts in China highlight the challenges that the coal and steel industries face worldwide.
China has been accused of selling unwanted steel on global markets for less than it costs to produce and export, throttling rivals from other countries. The U.S. and the European Union have repeatedly complained about the issue, slapping heavy tariffs on Chinese steel products.
Despite the huge numbers of layoffs cited by the government, analysts say it’s unclear how deep the cuts really go.
Chinese firms are shedding jobs but they appear “reluctant to shutter idle coal mines and steel mills and write them off,” analysts at Capital Economics wrote in a report published Wednesday.
“China is still a long way from resolving its surplus capacity woes,” wrote Chang Liu and Julian Evans-Pritchard.
China is trying to shift its slowing economy away from a traditional reliance on manufacturing and state-directed investment in infrastructure.
A key challenge is overhauling inefficient state-owned companies, many of which are heavily in debt and hoover up a disproportionate share of financing from banks. That deprives private businesses of the funds they need to grow.
“Policymakers continue to drag their feet on reform due to fears that deep capacity cuts would cause a rise in layoffs and an immediate economic downturn,” the Capital Economics report said. “But unless officials act soon, the economy’s sustainable growth rate could more than halve in the years ahead.”
Trump, meanwhile, wants to go in the other direction, telling U.S. coal miners on the campaign trail they will be “working your asses off” under his presidency.
But analysts and even a top coal industry executive have warned him he’s promising the impossible.
“The coal jobs aren’t coming back,” said James Van Nostrand, director of the Center for Energy and Sustainable Development at West Virginia University College of Law. He said in January that “market forces” rather than regulation are pummeling the industry.
— Serenitie Wang contributed to this article.
