Run For Your Life

Countries evacuating nationals from Chinese coronavirus areas
Reuters

A growing number of countries around the world are evacuating or planning to evacuate diplomatic staff and citizens from parts of China hit by the new coronavirus.

Following are some countries’ evacuation plans, and how they aim to manage the health risk from those who are returning.
- Kazakhstan, which has previously evacuated 83 from Wuhan, will send two planes to China on Feb. 10 and Feb. 12 to evacuate its citizens. Out of 719 Kazakhs remaining in China, 391 have asked to be repatriated.
- A second evacuation flight is bringing back another 174 Singaporeans and their family members from Wuhan to the city-state on Feb. 9, Singapore’s foreign ministry said.
- Thirty Filipinos returned to the Philippines on Feb. 9 from Wuhan, the Department of Foreign Affairs said. The returning passengers and a 10-member government team will be quarantined for 14 days.
- Britain’s final evacuation flight from Wuhan, carrying more than 200 people, landed at a Royal Air Force base in central England on Feb. 9. A plane carrying 83 British and 27 European Union nationals from Wuhan landed in Britain last week.
- The 34 Brazilians evacuated from Wuhan landed in Brazil on Feb. 9, where they will begin 18 days of quarantine.
- Two planes with about 300 passengers, mostly U.S. citizens, took off from Wuhan on Feb. 6 bound for the United States -- the third group of evacuees from the heart of the coronavirus outbreak, the U.S. State Department said.
- Uzbekistan has evacuated 251 people from China and quarantined them on arrival in Tashkent, the Central Asian nation’s state airline said on Feb. 6.
- A plane load of New Zealanders, Australians and Pacific Islanders evacuated from Wuhan arrived in Auckland, New Zealand on Feb. 5, officials said.
- Taiwan has evacuated the first batch of an estimated 500 Taiwanese stranded in Wuhan.
- Italy flew back 56 nationals from Wuhan to Rome on Feb. 3. The group will spend two weeks in quarantine in a military hospital, the government said.
- Saudi Arabia has evacuated 10 students from Wuhan, Saudi state television reported on Feb. 2.
- Indonesia’s government flew 243 Indonesians from Hubei on Feb. 2 and placed them under quarantine at a military base on an island northwest of Borneo.
- South Korea flew 368 people home on a charter flight that arrived on Jan. 31. A second chartered flight departed Seoul for Wuhan on Jan. 31, with plans to evacuate around 350 more South Korean citizens.
- Japan chartered a third flight to repatriate Japanese people, which arrived from Wuhan on Jan. 31, bringing the number of repatriated nationals to 565.
- Spain’s government is working with China and the European Union to repatriate its nationals.
- Canada evacuated its first group of 176 citizens from Wuhan to an Ontario air force base early on Feb. 5, according to the Globe and Mail newspaper. The country’s foreign minister said a second group should arrive later on Feb. 5 after changing planes in Vancouver. All evacuees will be quarantined on the base for two weeks.
- Russia said it would begin moving its citizens out of China via its Far Eastern region on Feb. 1, regional authorities said. It plans to evacuate more than 600 Russian citizens currently in Hubei, Deputy Prime Minister Tatiana Golikova said. A first Russian military plane took off on Feb. 4 to evacuate Russian citizens from Wuhan, the RIA news agency reported.
- The Netherlands is preparing the voluntary evacuation of 20 Dutch nationals and their families from Hubei, Foreign Minister Stef Blok said. The Netherlands is finalising arrangements with EU partners and Chinese authorities.
- France has evacuated some nationals from Wuhan and said it would place the passengers in quarantine. It said it would first evacuate nationals without symptoms and then those showing symptoms at a later, unspecified date.
- Swiss authorities said they hope to have about 10 citizens join the French evacuation of nationals from China.
- A plane brought 138 Thai nationals home from Wuhan last week. They will spend two weeks in quarantine.

China Is Bluffing in the Trade War

Chinese say they can effectively retaliate against Trump’s tariffs. They’re wrong.

BY SALVATORE BABONES

A Chinese worker looks on as a cargo ship is loaded at a port in Qingdao, China, on July 13, 2017.

U.S. President Donald Trump’s trade war with China is about to get real. 

Until this point, not much has happened, because the 25 percent tariffs on Chinese goods that the Trump administration announced in May did not apply to goods already in transit. 

That created a four- to six-week window of opportunity for U.S. and Chinese negotiators to come to an agreement and avoid the implementation of the duties.
That window is now closing, and with no deal in sight, speculation has turned to how China might respond. 

With Chinese official media vowing no compromise in negotiations with the United States, the country seems to be settling in for a protracted siege.
Considering that China ran a trade surplus of $420 billion with the United States last year, it is obvious that it can’t come close to matching the United States in terms of tit-for-tat tariffs. 

But it does have other arrows in its quiver. 

Expert commentary and internet speculation have focused on three: an embargo on imports of soybeans from the United States, an embargo on exports of rare earth metals to the United States, and the diversification of China’s currency reserves away from the dollar.
Fortunately for the United States—and for the health of the global trading system—each of these would be an empty threat.
In 2018, as rhetoric about the trade war took off in earnest, China slapped a punitive tariff of 25 percent on American soybeans. 

Soybeans are the United States’ biggest farm export, and they are important crops in the Midwestern states that swung to elect Trump in 2016. 

The 25 percent duty has been widely cited as the root cause of low prices that have led to a wave of farm foreclosures across the U.S. heartland.
The United States’ largest competitor in the global soybean market is Brazil, so one might expect Brazilian farmers to be jumping with joy as they see more demand for their produce. 

But Brazilian soybean prices have fallen almost 20 percent since April 2018, almost exactly matching the slightly over 20 percent fall in U.S. soybean prices for that period.
The reason is simple: Soybeans are fungible. 

When China buys Brazilian soybeans instead of American ones, Europeans have to turn to soybeans from the United States to replace their usual Brazilian supplies. 

There is one, single, undifferentiated global market for soybeans. 

Squeeze it in one place, and it just pops out in another.
Indeed, the decline in soybean prices is global, and it has nothing to do with the U.S.-China trade war. It’s all about the Chinese swine fever. 

The majority of the world’s soybeans feed pigs and other animals, not people, and China’s pork producers have been hit with a nationwide fever epidemic.
As a result, Chinese purchases of U.S. soybeans have now stopped completely. 

That may look like a total soybean embargo. 

But the reality is that China just doesn’t need as many soybeans, because it doesn’t have as many pigs to feed. 

As the swine fever continues to rage, look for U.S. exports of pork products to boom.
China is by far the world’s largest producer of rare earth metals: elements such as neodymium, europium, terbium, and dysprosium that are crucial to the production of some advanced materials and electronics. 

Despite their name, rare earths really aren’t so rare, and, in fact, the United States was the world’s major producer until cheap Chinese sources undercut the market in the 1980s.
The United States still has plenty of rare earth metals, but the environmental costs of extracting them from the underlying ores are too high to make production economic. 

Refining the minerals is only cheap in China because of the country’s lax environmental standards. 

If China does place a global embargo on the export of rare earths, prices will go up to reflect the metals’ true economic costs, which would actually be a good thing (from an environmental perspective).
Anything less than a total global embargo, however, would be useless, since, even more so than soybeans, rare earths are entirely fungible. 

China found that out in 2010, when it slapped an embargo on rare earth exports to Japan. 

Analyses a few years later found that the export ban had virtually no ill effect. 

If China sells them to anyone, U.S. companies can just buy them secondhand or switch to alternative inputs to their industrial processes.
China holds an estimated $1.1 trillion of U.S. government bonds, out of a total foreign currency reserve of around $3 trillion. 

That sounds like a lot of money, but in comparison to the size of its economy and levels of international trade, China’s reserves are roughly in line with those of other developing countries. 

It’s also not a particularly large proportion of the roughly $22 trillion total U.S. government debt to the world outstanding.
Alarmists warn that a Chinese dollar dump could send U.S. interest rates soaring and the U.S. economy crashing down. 

Just about everyone else understands that the huge market for U.S. Treasury securities, with an average daily trading volume of $500 billion in the spot market—and many times that in swaps, options, and futures—could easily absorb China’s entire reserves.
Ironically, the biggest victim of any Chinese liquidation of U.S. dollar holdings could be the European Union. 

Any reduction in China’s dollar reserves holdings would have to be matched by a corresponding rise in its holdings of other currencies, and the euro is the most likely alternative. 

But eurozone government bond trading is much thinner and more fragmented than the U.S. Treasurys market. 

A massive Chinese shift into euros could see that currency skyrocketing, placing a massive drag on Europe’s big industrial exporters.
The truth is that China has very little leverage in a trade war with the United States. 

Given Beijing’s bluster, it can be easy to forget that China is still a relatively poor country with a GDP per capita less than one-sixth the U.S. level. 

Compared to the America’s, China’s economy is relatively inefficient and undifferentiated, and its markets are poorly developed.
The simple fact is that China needs the United States more than the United States needs China. 

In itself, that’s no reason to start a trade war. 

But if the trade war really does heat up, there’s little doubt who will win.

Brazil’s Bolsonaro gives China electric shock

By Christopher Beddor

Jair Bolsonaro, nationalist lawmaker and presidential candidate of the Social Liberal Party (PSL), at a polling station in Rio de Janeiro, Brazil October 28, 2018. 
HONG KONG -- Brazil’s Jair Bolsonaro threatens to short-circuit China’s energy plans. 

Beijing-backed energy companies hope to invest tens of billions of dollars in Brazilian power, but the president-elect has warned of Chinese intentions. 

China is best known as a buyer of Brazilian commodities, but it is also an active direct investor. 

The country has plowed $124 billion into the Latin American nation since 2003, according to Reuters. 

A large chunk of that has focused on energy, with state-owned companies such as State Grid and China Three Gorges investing billions of dollars in dams and electricity transmission.
Chinese power companies have grown adept at operating dams and renewable energy projects at home, as well as transmitting electricity over vast distances to coastal population centers. 

Brazil faces a similar geographic challenge, making it a natural place for China to export its expertise. 

State Grid is eager to export its ultra-high voltage transmission technology, which can carry power a long way with low leakage. 

It plans to invest 140 billion reais ($38 billion) in Brazil over the next five years.
However, China’s image problem overseas – mostly related to the behavior of firms in other sectors like telecommunications – are now complicating its investment strategy. 

Like U.S. President Donald Trump, Brazil’s new president-elect intoned darkly about Beijing on the campaign trail. 

“The Chinese are not buying in Brazil,” he said. 

“They are buying Brazil.” 

Last month he said that he would oppose the sale of power generation assets of Eletrobras – a state power company that has been a focus of privatization efforts – because it might put the country “in the hands of China.”
Bolsonaro’s actual policies might fall far short of his rhetoric. 

The pinched administration might be tempted to offload state assets to the highest-paying bidder of whatever nationality, and indeed his comments on Eletrobras leave open the possibility that its other businesses, such as distribution, might be privatised.
Even so, the populist victory could throw up unpredictable obstacles to expansion for years to come. There may be plenty of similarities between Brazil and China, but politics is certainly not one.

"The Chinese are not buying in Brazil. They are buying Brazil"

Presidential candidate Jair Bolsonaro's anti-China sentiment has Beijing nervous
By Jake Spring

BRASILIA - The Chinese government is trying to make peace with Brazil's leading presidential candidate, Jair Bolsonaro, whose China-bashing threatens to chill a profitable trading relationship.
Chinese diplomats based in Brasilia have met twice with top Bolsonaro advisors in recent weeks, according to participants in the meetings. 

Their aim is to highlight cooperation with Latin America's largest country, whose grain and minerals have fueled China's rise.
Mr Bolsonaro has portrayed China as a predator looking to dominate key sectors of its economy.
With its own economy slowing, China cannot afford to become embroiled in another costly trade war like that which has erupted between Beijing and Washington.
Two-way trade between China and Brazil stood at $75 billion last year, according to Brazilian government statistics. 

China has invested $124 billion in Brazil since 2003, mostly in the oil, mining and energy sectors. China is eager to bankroll railway, port and other infrastructure projects here to speed the movement of its Brazilian grain.
But the patriotic Bolsonaro, much like U.S. President Donald Trump, has criticized China repeatedly on the campaign trail, saying the Chinese should not be allowed to own Brazilian land or control key industries. 

An ardent nationalist, Mr Bolsonaro is expected to win a landslide victory in balloting this Sunday.
"The Chinese are not buying in Brazil. They are buying Brazil," Mr Bolsonaro has warned repeatedly.
Companies in the crosshairs include China Molybdenum Co Ltd, which bought a $1.7 billion niobium mine in 2016 that Mr Bolsonaro says Brazil should develop itself.
Niobium is used as an additive to steel to make it stronger and lighter. 

It is used in cars, buildings, jet engines and a host of other applications. 

Brazil controls about 85 percent of the world's supply and Mr Bolsonaro wants his nation to reap the benefits.
Mr Bolsonaro is also on record opposing a planned privatization of some assets of state-owned utility Centrais Eletricas Brasileiras SA (Eletrobras) on concerns that Chinese buyers would win the bid.
Officials at China Molybdenum declined requests for comment. 

But six senior executives at Chinese companies operating in Brazil told Reuters they were watching Mr Bolsonaro's remarks with varying degrees of concern.
"We are worrying a bit about some of his extreme views," one Chinese infrastructure executive told Reuters. 

"He is on guard against China."
Bolsonaro's friendly leanings toward Taiwan are likewise vexing to Beijing.

Mr Bolsonaro in February became the first Brazilian presidential candidate to visit Taiwan since Brazil recognized Beijing as the sole Chinese government under the One China policy in the 1970s.
The Chinese embassy in Brazil issued a letter condemning Mr Bolsonaro's Taiwan trip as an "affront to the sovereignty and territorial integrity of China."
Mr Bolsonaro's combative stance is in stark contrast to the rest of Latin America, whose leaders have welcomed Chinese investment, loans and commodities purchases.
And it could eventually put him at odds with Brazil's powerful farm and mining industries, for whom China is an indispensable customer.
Shares of Brazilian miner Vale SA, for example, the world's largest iron ore producer, hit an all-time high last month on strong Chinese demand for its high-quality ore.
Brazil's farm sector, meanwhile, has reaped the benefit of China's feud with President Trump. 

Beijing has sharply reduced purchases of American soybeans, filling the gap with Brazilian grain. Brazilian exports of soy to China are up 22 percent by value this year with about 80 percent of its soy shipments now destined there.
The U.S.-China trade war has given Brazil leverage for now. 

Presidential candidate Jair Bolsonaro attends a news conference in Rio de Janeiro, Brazil October 11, 2018. 

PRIVATE MEETINGS
Chinese diplomats met with Mr Bolsonaro's top economic advisor Paulo Guedes in early September to discuss the importance of the bilateral relationship, Qu Yuhui, Chinese Minister-Counselor at the embassy in Brasilia, told Reuters on Monday.
Guedes was offered a trip to China to strengthen his knowledge of the world's second-largest economy, Qu said. 

He said Chinese diplomats made it clear they would like to meet Mr Bolsonaro in person, although no meeting has been set.
"Regardless of right- or left-wing, we want to talk and advance the smooth development of China-Brazil relations," Qu said. 

Guedes did not respond to requests for comment.
Last week Reuters spotted Qu and another Chinese diplomat entering the offices of Congressman Onyx Lorenzoni, Mr Bolsonaro's campaign manager, proposed chief of staff and the organizer of the candidate's Taiwan trip.
Qu declined to comment on the matter.
Lorenzoni said he met with two Chinese diplomats and that there would be further talks after the election. 

He said China is a vital partner and the two countries would maintain good relations.
If elected, Mr Bolsonaro's first major meeting with the Chinese would come early in his presidency. Brazil hosts the BRICS summit in 2019, an event that Chinese dictator Xi Jinping is likely to attend.

'BUYING BRAZIL'
Mr Bolsonaro is content with China purchasing commodities. 

But the former Army captain is wary of the Asian nation's recent shopping spree in Brazil's energy and infrastructure sectors.
China Three Gorges Corp paid 4.8 billion reais ($1.48 billion) in 2016 to operate two of Brazil's largest dams. 

Last year, State Grid Corp of China bought a controlling stake in Sao Paulo's CPFL Energia SA and a subsidiary for 17.36 billion reais ($4.90 billion), while China's HNA Airport Holding Group Co Ltd bought a controlling stake in Brazil's second-busiest airport.
Brazil is now expected to put a number of government concessions and assets up for bid next year, including railways and state-held energy assets.
The outgoing administration of Brazilian President Michel Temer has attempted to privatize state-controlled energy company Eletrobras, a move which requires congressional approval.
Mr Bolsonaro has said he is against selling Eletrobras generation assets because it would "leave Brazil in Chinese hands."
The Chinese infrastructure executive said his company was worried that Mr Bolsonaro might change the government auction rules to disadvantage Chinese bidders. 

He and other Chinese executives who spoke to Reuters declined to be identified.
To date, Mr Bolsonaro has been vague about how he would carry out actions to stop Chinese investment he sees as undesirable. 

Brazil has no equivalent of the U.S. Committee on Foreign Investment, which reviews the national security implications of foreign investment in American companies.

How China Skirts America’s Antidumping Tariffs on Steel

Government-backed manufacturers have avoided steep U.S. and EU levies by shutting production at home and expanding overseas

By Matthew Dalton in Smederevo, Serbia, and Lingling Wei in Beijing

A steel mill outside Smederevo, Serbia, that was bought and revived by Hesteel Group, a Chinese state-owned steelmaker. 

Three years ago, the steel mill outside the small city of Smederevo, Serbia, appeared headed for the scrap heap.
The Serbian government, which owned the mill, had stopped subsidizing it after six straight years of losses. 

Hemorrhaging cash, it struggled to buy spare parts and raw materials such as iron ore.
“It was like trying to drive a car without tires,” says Siniša Prelić, a union leader at the factory.
Now production is hitting all-time highs under its new owner, Hesteel Group, a Chinese state-owned steel producer. 

Exports from the plant, which is backed by tens of millions of dollars from Chinese state banks and investment funds, are surging. 

And it has started shipping steel to the U.S.
As the Trump administration ramps up its fight against Chinese steel and Commerce Secretary Wilbur Ross ended trade talks with Beijing over the weekend without a settlement, U.S. officials are confronting a strategic shift from China’s state-backed manufacturers. 

For the past several years, they have been shutting production at home and expanding overseas, fueled by tens of billions of dollars from Chinese state-owned lenders and funds.

Global Expansion
Chinese steelmakers have been buying and building plants overseas, fueled by tens of billions of dollars from Chinese state-owned lenders and funds.
By owning production abroad, Chinese steelmakers aim to gain largely unfettered access to global markets. 

Their factories back in China are constrained by steep tariffs imposed by the U.S. and numerous other countries—largely before President Donald Trump took office—to stop Chinese steelmakers from dumping excess production onto world markets. 

But their factories outside China face few so-called antidumping tariffs.
The Trump administration in March jolted the global trading system by imposing additional tariffs of 25% on all imported steel and 10% on aluminum, a move aimed at ratcheting up pressure on China to shut domestic steel and aluminum plants. (Last week, those tariffs were extended to Canada, Mexico and the European Union.) 

The EU is considering its own tariffs to stop metals exports blocked by the U.S. tariffs from flooding into Europe.
Even though the new U.S. tariffs apply to Chinese steelmakers that moved production abroad, the moves are still paying off. 

The Trump tariff rate is much lower than existing U.S. antidumping tariffs on steel produced inside China, which often exceeded 200%.
A spokesman for Hesteel declined to comment. 

China’s Ministry of Industry and Information Technology, which oversees the steel and aluminum industries, didn’t respond to inquiries.
Chinese overcapacity has depressed global steel prices and wreaked havoc on China’s competitors. After cajoling Beijing to cut domestic capacity, Western officials have watched with exasperation as Chinese companies boost production around the world. 

And Western industry executives worry the overseas investments are helping Chinese steelmakers avoid the antidumping tariffs that governments have imposed to protect their companies against unfair Chinese trade practices.

Chinese steel production rose sevenfold between 2000 and 2013. A worker helps load steel rods at a plant in Hebei province. 

China’s steel-production boom took off around the turn of the century as Beijing threw its support behind a sector seen as vital to the nation’s emergence as a global economic power. 

The 2008 financial crisis prompted Beijing to undertake an economic stimulus program that included the construction of hundreds of new steel plants. 

Chinese steel production rose sevenfold between 2000 and 2013, when it accounted for half of all global capacity.
By 2013, China’s domestic economy was slowing, leading Chinese steel and aluminum producers to flood global markets and drive down prices. 

The average price of Chinese steel exports fell by about 50% between 2011 and 2016.
Governments around the world responded by imposing more than 130 antidumping tariffs against Chinese metals manufacturers, mostly on steel, depriving the domestic market of an important outlet.
Beijing responded by ordering capacity cuts: a net of 150 million tons of annual steel capacity is slated to be shut between 2016 and 2020, as are aluminum plants that were built without government approval. 

At the same time, in 2014, the government launched a plan, called International Capacity Cooperation, that enlisted Chinese state financial institutions to help manufacturers add production overseas.
Analysts and Western government and industry officials say Chinese manufacturers are receiving hundreds of billions of dollars of state support to build and purchase plants on foreign soil, through money provided by institutions such as China Development Bank, Bank of China and funds like China Investment Corp. 

The overseas plants are likely to be tapped as exclusive suppliers for the “One Belt, One Road” initiative, Beijing’s trillion-dollar infrastructure plan to project economic influence across Eurasia and Africa.
“China is just moving whole industrial clusters to external geographies and then continuing to overproduce steel, aluminum, cement, plate glass, textiles, etc.,” says Tristan Kenderdine, research director at Future Risk, a consulting firm that tracks China’s overseas investments. 

“None of this is economically viable under a supply-demand regime without state subsidies.”
Chinese steel companies have signed agreements to build plants in Malaysia, Pakistan, India and elsewhere.
In northern Brazil, a Chinese consortium is expected to break ground later this year on an $8 billion project to build one of the world’s biggest steel plants, expanding Brazil’s potential steel output even though the industry there operates at less than 70% of capacity.
“This is total nonsense, with all the idle capacity that we have,” says Alexandre Lyra, chairman of the Brazilian Steel Institute, which represents Brazilian producers.
Chinese companies also are building new steel mills in Indonesia. 

Last year, Tsingshan Group Holdings, a state-backed steel producer based in Wenzhou on China’s southeastern coast, opened a two-million-ton stainless-steel plant on the Indonesian island of Sulawesi that accounts for 4% of the world’s stainless-steel production. 

The mill, built using a $570 million loan from the China Development Bank, is now pushing down prices from Asia to the U.S., industry executives and analysts say.
“We are seeing tenders in the area from Tsingshan at very, very, competitive prices,” Miguel Ferrandis Torres, financial director at stainless-steel companyAcerinox , told analysts in April. Tsingshan is likely losing money on those shipments from its Indonesian plant, Mr. Torres said.
Tsingshan declined to comment.
Tsingshan’s product is entering the U.S. through a joint venture with Pittsburgh-based stainless-steel producer Allegheny Technologies Inc. 

The joint venture is restarting a stainless-steel rolling plant in western Pennsylvania that Allegheny had shut in 2016 partly because of pressure from inexpensive Chinese imports. 

The new company is importing 300,000 metric tons of semifinished stainless-steel slabs from Tsingshan’s Indonesian plant—replacing slab Allegheny made in a now-closed production line—and processing them into sheets for products ranging from household appliances to medical equipment.
That put downward pressure on U.S. stainless-steel prices last year, industry executives say. 

“We’re moving from being a high-cost producer, which we’ve been for a while, to being the low-cost producer in the market,” Robert Wetherbee, an Allegheny executive, told analysts in November.
The Trump tariffs that came into force in March hit the stainless steel Tsingshan was importing from Indonesia to its joint-venture plant in Pennsylvania. 

Allegheny has asked the Trump administration for an exemption from the tariffs on those imports.
Tsingshan is expanding its Indonesian plant, and Jiangsu Delong, a Chinese producer based in Jiangsu province, is building another plant nearby. 

Those projects alone will increase global stainless-steel capacity by 9% from 2017 levels, according to Michael Finch, a steel analyst at  CRU Group in London, even though the stainless-steel industry has significant spare capacity.

Hebei province, a pollution-choked region near Beijing, is home to steelmaking operations like this one in Qian'an. 

In 2014, officials from Hebei province, a pollution-choked steelmaking region near Beijing, began hunting for overseas investments for the province’s most important company: Hebei Iron & Steel Group, renamed Hesteel Group in 2016.
When Hebei officials approached the Serbian government in 2014 about investment opportunities in the country, Belgrade immediately thought of the Železara Smederevo steel company, which had a mill on the Danube River, say people familiar with the deal.
The Serbian government had purchased the plant in 2012 for $1 from United States Steel Corp. 

After shutting the plant for several months, Belgrade restarted it to make it attractive for potential buyers, pumping tens of millions of dollars into it to keep it alive.
But with its public finances deteriorating, Serbia in 2014 sought a standby loan facility from the International Monetary Fund, which along with the European Commission, ordered it to stop subsidizing the steel company.
In early 2015, the Serbian government pulled the plug on subsidies for Železara, says Bojan Bojkovic, who was in charge of efforts to sell the mill for the Serbian government. 

“A lot of people, especially so-called economists, wanted to shut it down immediately,” he says.
Meanwhile, in March 2015, Hesteel signed an agreement with China Investment Corp., which has more than $200 billion in foreign assets, to fund Hesteel’s overseas expansion.

Beijing touted the $54 million acquisition of the steel plant in Serbia as one of China’s flagship overseas investments. 

During the talks with the Serbians, Hesteel pledged to invest at least $300 million in the plant over the next three years. 

Beijing touted the €46 million ($54 million) acquisition as one of China’s flagship overseas investments. 

Chinese dictator Xi Jinping visited the mill for the June 2016 signing ceremony.
Hesteel executives have said that they quickly turned around the money-losing plant after taking control in June 2016. 

Serbian corporate records show an operating loss of $34 million over the next six months. 

Records for 2017 aren’t yet available.
“This is all part of a huge political initiative,” says Markus Taube, professor of East Asian economic studies at the Mercator School of Management in Duisburg, Germany. 

“They are extremely insensitive to losses.”
The EU for years has applied tariffs to low-price Chinese steel exports. 

Now, Hesteel’s Serbian plant can export tariff-free into the 28-nation bloc.
“We feel like the Serbian plant is a Trojan horse,” says Sonia Nalpantidou, a trade-policy expert with Eurofer, a trade association representing EU steel producers.
At a steel expo in Beijing last month, a “Hesteel of the World” banner hung near the company’s booth. 

Pins in a map marked countries where Hesteel had invested—Serbia, Macedonia, Switzerland, South Africa, Australia and the U.S. 

A company representative said overseas expansion is now a core strategy. 

The company is planning to build more plants in regions such as North America, she said, and plans to derive 20% of revenue from non-Chinese markets by 2020.
“Products made in Europe shouldn’t be subject to European tariffs,” the representative said.
Late last year, Hesteel offered $1.5 billion for a large steel mill in Slovakia owned by United States Steel, according to a person familiar with the talks. 

The Slovak prime minister said last month that U.S. Steel wouldn’t sell the plant to Hesteel. 

A U.S. Steel spokeswoman declined to comment.

After purchasing the plant in Serbia, Hesteel began selling its output onto the U.S. market. 

After purchasing the plant in Serbia, Hesteel began selling its output, including a sheet-steel product called wide hot-rolled coil, onto the U.S. market through Duferco, a Swiss trading company in which it owns a 51% stake.
Since 2001, China’s domestic producers of that product have faced antidumping tariffs of more than 64% at U.S. borders, effectively shutting them out of the market. 

Hesteel’s Serbian plant could export to the U.S. with minimal tariffs—until the additional Trump tariffs took effect earlier this year.
In March, one of the Serbian plant’s U.S. customers, Priefert Ranch Equipment of Mount Pleasant, Texas, asked the Trump administration for an exemption from the tariff to import 24,000 metric tons of steel sheet annually made at the plant. 

Priefert argued that it has long relied on overseas steel mills to supply product that domestic mills don’t produce. 

Priefert executives didn’t respond to a request for comment. 

The Trump administration hasn’t yet decided on the request.
“We want to be the world’s Hesteel,” Yu Yong, the company’s chairman, said when he signed the deal to buy the Serbian plant. 

He pledged to make the Serbia plant “the most competitive steelmaker in Europe.”