East Michigan News

Chairman John Moolenaar of the House Select Committee on the Chinese Communist Party has addressed concerns to Secretary of Commerce Gina Raimondo regarding China's market practices. Moolenaar's letter highlights the impact of these practices on the global economy, using the resin industry as an example.

In his communication, Moolenaar emphasized the need for Commerce to apply "special rules for costs" to adjust reported costs from foreign producers. This measure aims to counteract overcapacity and market distortion affecting the American economy.

"The effects of the PRC’s overcapacity extend far beyond individual sectors—affecting the broader U.S. economy and undermining entire supply chains," Moolenaar stated. He pointed out that falling capacity utilization in China, combined with increased production capacity and declining domestic prices, pressures prices outside China. This situation leads to underpriced products flooding global markets, eroding competitiveness internationally and particularly for American businesses.

Moolenaar argued that this trend disrupts fair pricing mechanisms and encourages unsustainable production investments. It forces foreign producers to rely heavily on exports at the expense of U.S. manufacturers. Government subsidies and opaque pricing structures further exacerbate these issues, resulting in artificially low prices in both U.S. and global markets.

The Chairman proposed six quantitative measures for Commerce to consider when defining overcapacity and assessing its harmful effects on U.S. producers: falling utilization of existing capacity, overinvestment in new capacity, increasing reliance on exports, falling prices in domestic markets, falling prices in export markets, and shrinking profit margins.

The full letter can be viewed online.