(Editor’s Note: This article provides a panoramic overview of China’s steel industry today. Since the reform and opening-up, China’s steel industry has accumulated numerous experiences and lessons along its journey. Which of these are worth drawing upon for the future?)

How can the steel industry overcome difficulties and undergo transformation and upgrading?

China’s steel industry is facing a series of major challenges, including severe overcapacity. Yet, the steel industry remains one of China’s most globally competitive sectors, with the strength to go international, integrate into the global market, and leverage both domestic and international markets to overcome difficulties and achieve transformation and upgrading.

Looking back at the development of China’s steel industry since the 1990s, we can see just how rapidly it has grown—simply by examining the indicator of crude steel production: In 1996, annual crude steel output exceeded 100 million tons; by 2003, it had surpassed 200 million tons. Thereafter, output increased by roughly 100 million tons every two years, reaching 823 million tons in 2014. Throughout the history of the steel industry, only three countries— the United States, the former Soviet Union, and Japan—have ever achieved annual steel production levels exceeding 100 million tons; yet none of them ever reached an annual output of 200 million tons. While experiencing rapid growth, China’s steel industry is now facing a series of major challenges, including severe overcapacity. I have participated in the decision-making and approval processes for numerous steel-related projects, and I have deep personal ties to China’s steel industry. In my view, looking back at the development journey of China’s steel industry, there are many significant issues that deserve careful reflection and consideration.

The rise of a major power would not have been possible without the steel industry.

China’s rise as a major manufacturing power owes much to its steel industry, which plays a crucial supporting and driving role in sectors such as the defense industry, the petroleum industry, shipbuilding, construction, and equipment manufacturing.

Although emerging industries such as the internet have developed rapidly in recent years and become sunrise industries, traditional industries like steel seem to have become sunset industries. However, just like food, steel is by no means dispensable simply because of the rise of new industries. On the contrary, although steel and food are not emerging industries themselves, they remain evergreen—essential and indispensable at all times. Steel continues to be one of the most critical basic raw materials for the development of the national economy. China’s steel industry has made tremendous contributions to supporting the rapid development of the national economy.

Since the founding of New China, and especially since the implementation of the reform and opening-up policy, China’s industry has continued to develop rapidly, building a comprehensive and independently complete industrial system. There is no doubt that China has become a major manufacturing country, a development that has powerfully propelled China’s industrialization and modernization, significantly strengthened its overall national strength, and bolstered its status as a major world power. It is essential to recognize that the steel industry has played an indispensable role in China’s rise as a manufacturing powerhouse; it provides substantial support and impetus to sectors such as the defense industry, the petroleum industry, the shipbuilding industry, the construction industry, and the equipment manufacturing industry.

Without the support of the steel industry, China’s shipbuilding industry would never have been able to attain such a significant global share. In 2003, I wrote a report to central leaders proposing that China should become the world’s leading shipbuilding power. Back in 1975, China and South Korea each accounted for only 1% of the global shipbuilding industry, while Japan held 50% and Europe accounted for 43%. By 2010, China’s completed shipbuilding volume reached 65.6 million deadweight tons, representing 43.6% of the global shipbuilding market’s total completed output—placing China firmly at the top of the world rankings. Of course, in terms of technological content, China’s shipbuilding industry still lags behind South Korea today. However, if we adjust the total tonnage based on technological complexity, China has already surpassed South Korea. This has driven substantial growth in steel consumption. Without such robust shipbuilding capabilities, it would have been impossible for China to develop aircraft carriers or missile destroyers. All of these developments are closely intertwined with the steel industry.

It is understood that over the past 15 years of the new century, China has produced approximately 7 billion tons of steel. Without these 7 billion tons of steel, how could we have built the towering skyscrapers and the intricate network of railways and highways that crisscross our country? Like sturdy bones, steel provides powerful support for China’s rise as a major world power.

In 1949, China’s steel production stood at only 158,000 tons. By 1978, the nation’s total steel output had just surpassed 30 million tons. It was through reform and opening-up—and with the construction and commissioning of Baosteel—that China’s steel industry began to experience rapid development in both quality and quantity. The level of equipment and technology reached a major new milestone. For a long time, Chinese people referred to iron nails as “foreign nails” and tinplate as “foreign tinplate,” relying heavily on imports for steel products. It wasn’t until 2005 that China transformed from a net importer of steel into a net exporter, eventually rising to become the world’s largest steel-producing country. As times have changed, the steel industry has continuously adjusted and advanced.

Baosteel Construction: A Milestone in the Iron and Steel Industry

Since the reform and opening-up, the most significant event in China’s steel industry has been the construction of Baosteel. It can be said that the completion and commissioning of Baosteel have not only elevated China’s steel industry but also boosted the country’s overall industrial strength to a new level.

Comrade Chen Jinhua, former director of the State Planning Commission, served as the vice mayor in charge of industry in Shanghai after the downfall of the Gang of Four. He was also the first political commissar for the construction of Baosteel. He once told me about the entire process—from the initial decision to launch the project to its eventual shelving. This account is documented in his book, “Records of National Affairs.” It was senior leaders such as Deng Xiaoping and Chen Yun who made the crucial decision to proceed with the construction of Baosteel.

I once served as the chairman of the National Acceptance Committee for Baosteel’s Phase III Project. Baosteel was built in three phases over a total of 22 years—construction began in 1978, was temporarily halted for a period, and then resumed later. The final approved investment for the third phase amounted to 62 billion yuan, making it the largest industrial investment project in China since the founding of the People’s Republic of China.

I’ve always believed that the construction of Baosteel holds milestone significance in China’s modernization drive, and the process itself was extremely challenging. In the 1980s, when construction of Baosteel was temporarily halted, Japanese equipment suppliers demanded that China pay compensation. However, Chinese enterprises felt that the Japanese companies’ demand for compensation was not particularly friendly. As a result, when Baosteel resumed construction, it took a firm stance against Japan: it re-specified the 2050 hot continuous rolling mill to use German equipment—a deal worth roughly 400 million U.S. dollars. This was no small order.

Later, Japan sent a large delegation to Beijing to discuss this matter. Since I spoke Japanese, I served as the interpreter for Zhao Dongwan, the deputy director in charge of this project at the State Planning Commission at the time. The Japanese side apologized to us, saying that both the political and public circles in Japan had been deeply shocked upon hearing about the incident—and they hadn't expected Baosteel not to have ordered equipment from Japan. They requested that Japan be given another chance. We compiled a report on this situation and submitted it to the central authorities. After all, Nippon Steel had previously helped our country build Baosteel; therefore, after careful consideration, we ultimately placed an order for a 1900 slab continuous caster from Kobe Steel in Japan. As for the 2050-millimeter hot-rolling mill and the 2030-millimeter cold-rolling mill, they were both German-made equipment.

Baosteel Construction provided an excellent benchmark project for the localization of China’s steel equipment. In the first phase of Baosteel, virtually all core equipment was imported, with only about 12% of the peripheral structural components being domestically produced. By the second phase, the approach shifted to collaborative manufacturing, significantly boosting the rate of domestic component production. By the third phase, the localization rate of equipment had reached 80%. Drawing on Baosteel’s experience, subsequent projects such as the renovation of Baogang, the modernization of Pangang, and the construction of Caofeidian were successfully completed. As a result, China’s steel equipment has largely achieved localization, and the overall level of the steel industry has caught up with the world’s advanced standards.

China's steel industry has reached international standards.

Since the establishment of Baosteel, China’s metallurgical equipment has continuously innovated, and its manufacturing capabilities have steadily improved. Currently, most of China’s steel products have achieved domestic production, and their technology has gradually reached international standards.

China’s steel equipment has been continuously improving. In the 1970s and 1980s, the typical image of a steelworker was one wearing a baseball cap, wielding a large iron lance, and sporting safety goggles while operating in front of an open-hearth furnace—steel sparks flying everywhere. At that time, working at these outdated open-hearth furnaces was considered highly honorable. In reality, working at these backward furnaces was extremely arduous, with high energy consumption, low efficiency, and poor product quality. During my tenure as Deputy Director of the National Development and Reform Commission, there were still many open-hearth furnaces in operation. The former Ministry of Metallurgy had proposed phasing out obsolete equipment, and we actively promoted this initiative. As a result, open-hearth furnaces, blast furnaces below 300 cubic meters, and converters below 30 tons have gradually been phased out, replaced by state-of-the-art equipment such as 4,000- and even 5,000-cubic-meter blast furnaces, continuous casting and rolling lines for slab billets, and refining furnaces that have reached world-class standards.

In the early days of reform and opening-up, our country couldn't even produce small billet continuous casting machines; we had to import equipment and technology from abroad. Mining equipment was also extremely backward—our largest excavator could only handle 4 cubic meters, and we weren't yet capable of manufacturing electric wheel vehicles. Today, however, we can produce both 56-cubic-meter large electric shovels and 320-ton electric wheel vehicles. In the 1980s, among the 12 major sets of equipment identified by the State Council’s Office for Major Equipment as requiring key technological breakthroughs, one and a half sets were related to the iron and steel industry. One set was the Baosteel complete equipment package, including the 2050 hot continuous rolling mill, the 1900 slab continuous caster, and the 2030 cold rolling mill. The other set was the million-ton open-pit mining equipment package. I refer to it as “half a set” because this million-ton open-pit mining equipment package is also used in coal mines and non-ferrous metal mines. Its main components include 16- and 23-cubic-meter electric shovels and 108- and 154-ton electric wheel vehicles.

Since the establishment of Baosteel, China’s metallurgical equipment has continuously innovated, and its manufacturing capabilities have steadily strengthened. Most of the rolling mills designed and manufactured by Germany’s SMS Group and DEMAG—world-leading companies in metallurgical equipment design and manufacturing—are now subcontracted to Chinese enterprises such as First Heavy Industries. We have also begun experimenting with several advanced processes and equipment. For example, the Jianshan Iron Ore Mine in Taiyuan was the first in China to adopt pipeline transportation, a practice subsequently adopted at the Dahongshan Mine in Yunnan as well. Advanced equipment plays a crucial role in elevating the technological level of China’s steel industry. It is precisely because of this advanced equipment that labor productivity has improved and energy and material consumption have been significantly reduced, enabling us to enhance product quality and develop cutting-edge technologies and products. Today, despite substantial increases in energy prices, raw material costs, and labor expenses, the steel price index stands at only 60% of its 1994 level. Without advanced technologies and equipment, many enterprises simply would not be able to sustain themselves.

Advances in steel equipment and structural adjustments have driven continuous improvements in both product and technological structures. Currently, most of China’s steel products have achieved domestic production, and their technology has gradually reached international standards. In terms of specific products, such as casing pipes for the petroleum industry, X70 and X80 steels used in long-distance natural gas pipelines in the energy sector, ultra-low-temperature LNG storage tank plates, and steel plates for LNG carriers, have all been successfully localized. Although certain specialized steel grades—such as automotive steel wire cords, suspension bridge steel cables, and steel ropes for mine and elevator hoisting—have now been domestically produced, their quality remains somewhat unstable. On the technological front, technologies like dry quenching of coke and blast-furnace gas power generation have already been widely adopted, and the conversion of coke oven gas into natural gas is gradually gaining momentum. However, some technologies still require further exploration—for instance, Corex and short-process steelmaking technologies have not yet seen the widespread adoption that was initially anticipated. Of course, China still lags behind in many areas, including high-end products and environmental protection. For example, the steel required for 700℃ ultra-supercritical boilers in the energy sector has not yet been domestically produced and remains under active development. Moreover, many Chinese steel enterprises still face significant gaps compared to their international counterparts in terms of energy consumption per ton of steel. Moving forward, the steel industry must continue to foster innovation-driven development and pursue green growth, constantly adapting to new demands through advancements in both products and technology.

Structural adjustment is a matter of life and death for enterprises.

Industrial transformation and structural adjustment are a challenging process. The relocation of Shougang and the closure of Guanggang, among other examples, have all encountered numerous thorny issues and involved a painful journey. Nevertheless, this step is absolutely essential.

Regarding the structural adjustment of China’s steel industry, I’ve witnessed several major restructuring and construction projects involving leading steel enterprises. Although the process was fraught with twists and turns, it is nonetheless worthy of our learning from and reflection upon.

In the past, China’s steel industry largely developed around major cities, with a primary concentration in provincial capital cities. As urban functions continued to expand, steel plants became one of the city’s major sources of pollution, significantly impacting the local environment. For example, Shougang Steel—once located upwind and upstream—was situated in a region where, although Beijing’s smog hadn’t yet attracted as much attention as it does today, water resources were already becoming quite strained, exerting a substantial impact on Beijing’s environment. Consequently, the national government decided to initiate adjustments and first raised the issue of relocating Shougang Steel.

Shougang is one of the earliest Chinese enterprises to reach an annual steel production capacity of over 10 million tons. From political, economic, and technological perspectives alike, it holds a highly significant position in the history of China’s steel industry. Given its long-standing heritage, relocating such an historic steel plant from Beijing would undoubtedly be extremely challenging. Moreover, Shougang is closely tied to the employment of roughly 100,000 people and contributes 2 billion yuan in tax revenue to Beijing’s budget. As a result, there is considerable disagreement among various stakeholders on many aspects of this issue.

I proposed relocating the company, suggesting that Shougang’s headquarters and its research, sales, and other non-polluting departments could remain in Beijing, while some equipment-manufacturing operations could also stay put, thereby reducing the difficulty of the relocation. The primary focus would be on moving out the high-blast furnaces and steelmaking processes—activities that generate significant pollution. However, at the time, for various reasons—mainly due to disagreements in perception—the plan was put on hold. Later, after Beijing bid for the 2008 Olympic Games, public awareness of environmental protection began to shift, and everyone finally reached a consensus and resolved to relocate Shougang. I served as the deputy head of Shougang’s relocation leading group. At that time, we took into account the needs and concerns of both the Beijing municipal government and Shougang itself, making every effort to minimize resistance to the relocation and implementing several specific measures. For instance, we built a cold-rolling mill in Shunyi, preserving a portion of Shougang’s production capacity there, which helped absorb some of the workforce and maintain certain tax revenues. The central government also provided financial support to facilitate Shougang’s relocation. After Shougang moved to Caofeidian, the National Development and Reform Commission made every effort to negotiate a merger between Shougang and Tangshan Iron and Steel, resulting in the establishment of today’s Jingtang Steel Company.

The restructuring of Guangdong’s steel industry by Baosteel is far more complex than Shougang’s relocation. Baosteel Group has long had plans to establish a coastal steel base, and Guangdong has been the fastest-growing province since the reform and opening-up policy was introduced; steel imported from other provinces accounts for as much as 80% of the province’s total demand. Provincial leaders and local steel companies—Shaogang and Guanggang—hope to further expand their production capacities. Although Guanggang isn’t considered a major steel plant on a national scale, at the time it wielded considerable influence within Guangdong Province, especially in Guangzhou. By then, the steel industry had already experienced overcapacity, making it imperative to increase industrial concentration. If a new base were to be built in Zhanjiang, it would be necessary to phase out outdated production capacity through equivalent replacement—that is, shutting down Guanggang and Zhujiang Steel Plant and reorganizing Shaogang and other enterprises.

However, the restructuring of Guangdong’s entire steel industry by Baosteel has left many people emotionally reluctant to accept it. Yet, Guanggang and Shaogang are not major steel producers on a national scale; only through restructuring can they achieve sustainable development. After lengthy negotiations, Baosteel finally agreed to provide funding for the restructuring—but Baosteel was concerned about managing the workforce transition smoothly. As a result, the local government took responsibility for arranging job placements, effectively buying peace of mind at a price. All hot-processing facilities at Guanggang, Zhugang, and other similar plants were shut down and converted into steel trading enterprises. The closure of these two large steel mills eliminated roughly 5 million tons of production capacity. Combined with other smaller steel production units, the total capacity reduction amounted to around 10 million tons—thus achieving Baosteel’s goal of reducing capacity at its Zhanjiang base and replacing it with an equivalent amount of new capacity.

While Baosteel is restructuring Guangdong’s steel industry, Wuhan Iron and Steel (WISCO) also hopes to build a steel base along the coast of Guangxi. Otherwise, being located in central China, WISCO would find it extremely difficult to compete with coastal steel mills—simply the transportation costs for importing iron ore alone would pose a significant challenge. Guangxi has also expressed its desire to develop a modern steel base, pointing out that Guangxi is an autonomous region inhabited by ethnic minorities and has made tremendous sacrifices in aiding Vietnam against U.S. aggression and in the self-defense counterattacks. As a result, Guangxi’s economic development has lagged behind, and the government should prioritize supporting Guangxi’s development.

Baosteel’s Zhanjiang base and Wugang’s Fangcheng base are closely intertwined, making it difficult to justify approving just one of them. Under the current concern about overcapacity, decision-making becomes even more challenging. Therefore, we proposed that Wugang take charge of restructuring Guangxi’s steel industry—a move that would involve a strategic adjustment in regional industrial layout. In the past, many steel plants were established precisely because they relied on local iron ore resources. Today, however, 80% of China’s iron ore is imported from abroad, and compared to coastal steel mills, inland mills face significantly higher transportation costs. As a result, both inland and coastal steelmakers are eager to find new production bases along the coast. So I discussed this issue with Wugang’s leadership and suggested phasing out some of Hubei Province’s steel capacity while also taking into account adjustments at Liugang. From the perspective of structural adjustment, I believe that by building new bases and phasing out smaller, outdated capacities, we can achieve the goal of optimizing the industrial structure.

Industrially transforming and restructuring industries may sound easy to talk about, but putting it into practice is extremely challenging. After phasing out outdated production capacity and reshuffling regional industrial layouts, a large number of workers in labor-intensive and industry-driving sectors such as metallurgy will need to be re-employed. For example, when Baosteel reorganized Shanggang, Baosteel itself had only 20,000 employees at the time. Addressing the employment needs of roughly 200,000 steelworkers from Shanggang’s No. 1 to No. 10 plants was an enormously difficult undertaking. Nevertheless, Baosteel resolutely took this step forward. Baosteel restructured its older plants—some were repurposed exclusively for stainless steel production, others shifted to manufacturing sheet metal, and still others moved into producing wire products like steel cord for tires. In this way, the old steel enterprises were gradually and thoroughly transformed. This serves as an exceptionally successful case study.

Reorganizations always encounter various challenges—for example, the restructuring of Hangang Steel. Located in the semi-mountainous area of Hangzhou, which is already a popular tourist city, the semi-mountainous region, though not a core tourist attraction, already felt somewhat incongruous with the presence of a steel plant there. Moreover, like Guangang Steel, Hangang Steel has only blast furnaces of around 300 cubic meters. Although its operations are relatively stable and its overall performance remains good thanks to ventures such as real estate development, it has fallen behind the standards required by modern steel plants. At the time, we had hoped that Hangang Steel would take over Ningbo Steel and simply relocate it directly to Ningbo. However, due to differing opinions within Hangang Steel—actually, their reluctance to leave Hangzhou—the plan got delayed. But now, we have no choice but to pursue this restructuring path, because next year’s G20 summit will be held in Hangzhou, and by the end of this year, Hangang Steel must completely shut down.

When discussing structural adjustments, we simply can't overlook special steel. The rise of special steel enterprises has played a positive and driving role in the structural adjustment of the iron and steel industry. I’ve personally been involved in the construction of several key special steel companies, including Panzhihua Steel, Taiyuan Iron & Steel Stainless, Northeast Special Steel, and Jiuquan Iron & Steel Stainless. For instance, at the time, China couldn’t produce oil country tubular goods (OCTG). To address this gap, we built the Tianjin Seamless Steel Pipe Plant, whose main equipment was all imported. The process was extremely challenging. Although the plant successfully filled the domestic void in OCTG production, during its operation it faced severe financial losses, prompting consideration—at one point—of having Baosteel take over the Tianjin Seamless Steel Pipe Plant.

Shortly after Wu Bangguo was transferred from Secretary of the Shanghai Municipal Party Committee to Vice Premier of the State Council, he led relevant central government departments to Tianjin to address the issue of Tianjin Da Wuxing. That morning, they had just reached an agreement for Baosteel to merge with and restructure the Tianjin Seamless Steel Pipe Plant. But at noon, Comrade Zhang Lichang, a leader of the Tianjin municipal government, found it emotionally difficult to accept the deal and told Vice Premier Wu Bangguo that if Baosteel were to take over Tianjin Da Wuxing, the 8 million residents of Tianjin would never agree. In the afternoon, during a meeting, Vice Premier Wu Bangguo announced that the morning’s decision had been put on hold and would be reconsidered. Later, this task was assigned to the State Planning Commission, where I led a team of experts from an international engineering consulting firm to conduct detailed calculations. Premier Zhu Rongji approved the provision of substantial financial resources by the state for a comprehensive financial restructuring, which ultimately reduced the price of oil pipeline steel by half. Although these projects encountered numerous setbacks and involved significant costs, the construction of these special steel facilities fundamentally changed China’s reliance on expensive imports for many types of special steel, filled critical domestic gaps, and promoted the overall advancement of China’s steel industry.

Industrial transformation and structural adjustment are arduous processes that will not proceed smoothly. The relocation of Shougang and the closure of Guanggang, among other examples, have both encountered numerous thorny issues and undergone painful transitions, involving challenges on all fronts—these are the inevitable growing pains that any major steel-producing nation must face. Nevertheless, this step is absolutely essential. As China’s economy enters a “new normal,” its steel industry has also entered a new normal characterized by “three lows and one high”—low growth, low prices, low profitability, and high pressure.

Currently, steel companies are relying on low-price competition, and the current steel price index stands at only 60% of what it was in 1994. In other words, despite 20 years having passed and rising costs of materials and labor, steel prices have not only failed to increase—they’ve actually fallen. This trend has been absorbed largely through technological advancements and economies of scale, leaving profits extremely thin, or even resulting in losses for many companies. Moreover, environmental regulations are becoming increasingly stringent; if companies fail to meet these standards, more will be forced to shut down or shift operations. For the steel industry, the most critical aspect of the 13th Five-Year Plan is structural adjustment—a matter that directly determines the survival of the steel sector.

Speaking of structural adjustments, we must also mention the changes in the ownership structure. Under the long-term planned economy, the steel industry was dominated entirely by state-owned enterprises. However, after the reform and opening-up, the private sector began to flourish, and private steel companies—represented by Shagang—began to thrive. Today, the output of private steel enterprises already accounts for 55%, which represents a tremendous shift.

Go international and leverage two market mechanisms to address overcapacity.

Exporting means getting products out into the global market, but it also involves considering the export of production capacity. Previously, we focused primarily on the domestic market; now, we’re gradually shifting toward a balanced approach that emphasizes both attracting foreign investment and going global. The Belt and Road Initiative has created tremendous opportunities for steel to achieve a higher level of international expansion.

For a long time, there has been much debate over whether China’s steel production capacity is too high or too low—and what level of capacity would be appropriate. According to one set of data, since the discovery of the Americas, the United States has used roughly 10 billion tons of steel to build bridges, railways, skyscrapers, airports, and other structures. Japan, from the start of the Meiji Restoration to the present day, has used about 6 billion tons of steel. From 1949 to last year, China’s cumulative steel consumption for construction purposes has been around 8.5 billion tons. Currently, China is still in a stage of development and continues to require massive infrastructure investments. Considering China’s vast land area, I believe its steel consumption should also be around 10 billion tons.

The economy exhibits different characteristics at various stages of development, and the issue of production capacity should be viewed dialectically. During their periods of rapid economic growth, the United States, the former Soviet Union, Japan, and Germany all saw steel production exceed 100 million tons. Now that these phases of rapid growth have passed, with infrastructure already well-established and demand declining, steel production has fallen below 100 million tons and is facing painful adjustments. In the United States, the region around the Great Lakes centered on Chicago—known as the “Rust Belt”—is also undergoing a necessary restructuring of its industrial base.

Today, China’s steel production capacity has also become excessive. Market forces will inevitably bring about adjustments, ensuring that the market plays a decisive role in resource allocation while further enhancing the government’s role. Some people hope that economic development could remain consistently stable—neither too fast nor too slow—a scenario that reflects the ideal state of a planned economy. However, in reality, this is simply unattainable. In fact, economies always develop in waves. I believe that wave-like development is precisely what truly conforms to economic laws. For instance, many steel enterprises today are no longer profitable—or even suffering losses—and thus have no choice but to shut down or restructure. To survive, they must strive for innovation and seek new avenues for growth: developing new products, doing everything possible to cut costs, making great efforts to improve environmental performance, actively expanding overseas, and pursuing transformative development. Only by exploring such paths of transformation and upgrading can China’s steel industry enter a new stage of development. After the economy enters a “new normal,” a decline in steel production is bound to occur.

Regarding steel exports, I support imposing additional tariffs on the export of steel billets. We should discourage the export of low-grade, high-energy-consumption steel products—especially low-end steel billets and ferroalloys. As for high-value-added finished products such as pipes and sheets, China simply cannot avoid exporting them at its current stage of development; this is dictated by global market demand. Last year, China’s steel exports totaled nearly 100 million tons. As a major manufacturing country, China has a large population that needs employment—a situation determined by our national conditions. Moreover, about 80 million tons of steel were exported along with machinery, power-generation equipment, refrigerators, air conditioners, automobiles, and ships. Combined, these two categories account for nearly 200 million tons. Although Japan’s export ratio is higher than ours—Japan lacks both energy resources and iron ore—it still exports around 40% of its steel production, whereas China’s steel export share stands at roughly 11%. Compared to other major steel-producing countries, China’s export ratio remains reasonably moderate.

Exporting means getting products out into the global market, but it also involves considering the export of production capacity. In the past, our focus was primarily on the domestic market; now, we’re gradually shifting toward a balanced approach that emphasizes both “bringing in” and “going out.” In recent years, China has made investments abroad—starting with the Chana iron ore mine in Australia, followed by investments in iron ore mines in Peru and Brazil. Last year, China imported 930 million tons of iron ore, with an import dependency rate of around 80%. Investing overseas is thus an objective necessity.

Currently, China’s steel industry suffers from severe overcapacity. However, the Belt and Road Initiative has opened up tremendous opportunities for Chinese steel enterprises to expand their global presence at a higher level. Today, the Belt and Road Initiative has become a national-level strategy, and countries around the world are actively participating in it—covering roughly 60% of the global population and more than 60 countries. In the process of advancing the Belt and Road Initiative, we are not only a community of shared interests but also a community with a shared future. Steel enterprises have great potential to play a significant role in this endeavor.

For example, some industrial projects in China are looking to relocate to Kazakhstan—some of these projects are related to the steel industry, and Kazakhstan is highly supportive of such initiatives. Previously, the Jiuquan Steel Plant had expressed interest in collaborating with Kazakhstan, as Kazakhstan possesses iron ore deposits that could provide a steady supply in the future. At the time, however, the talks didn't come to fruition for various reasons. Now, thanks to the Belt and Road Initiative, we can once again consider forging a friendly cooperative relationship. Indonesia is also a hot spot for investment; although its steel industry is relatively small in scale, it boasts enormous potential demand. Recently, Indonesia has proactively reached out to us, seeking cooperation. This is because Indonesia has abundant marine sand containing magnetite, yet it doesn't have many domestic enterprises engaged in steel metallurgy. Therefore, Indonesia hopes to partner with us to develop steel-related projects locally. I believe this arrangement would be mutually beneficial for both sides. I’ve already held discussions with the Ministry of Foreign Affairs, and we’re now steadily moving forward with these efforts.

I believe that the steel industry has become one of China’s most globally competitive sectors, giving it the strength to go international and integrate into the global economy. By making good use of both domestic and international markets and optimally allocating resources at home and abroad, we should strive to carry out structural adjustments, place great emphasis on innovation-driven development, pay close attention to every single detail, reduce costs while boosting efficiency, pursue sustainable development, and thus promote the transformation and upgrading of China’s steel industry.