By KEITH BRADSHER and AILIN TANGMARCH
Ms. Li works at a Chinese aluminum factory, the sort of hulking industrial installation that has helped set off a global trade fight. President Trump imposed steep new tariffs on steel and aluminum imports last week, amid complaints from American companies that the Chinese government props up too many wasteful factories. But here in the small Chinese town of Chengkouzhen, officials last year let the factory go idle. That cut off the steam that once heated the apartments where its workers live.“I need to wear a thick cotton-padded jacket” even indoors, Ms. Li said. “I just hope this factory can operate again.”
Officials in Washington say that China has too many steel and aluminum factories — and many Chinese officials agree. In that way, Mr. Trump’s tariffs are aimed at trade battles of the past.
Even as China makes veiled threats to retaliate against the United States, it is forcing many Chinese companies to close wasteful, polluting factories to fix its economy and clean up its skies. It wants them to make more high-value, high-tech products instead — the kind that would compete with American goods on a whole new level. China has already moved away from exporting sheets of steel or chunks of aluminum, and toward selling prefabricated steel bridges and lightweight alloy aluminum car wheels.
In the years ahead, it wants to emphasize more sophisticated goods like robotic arms and electric cars that count steel and aluminum only as ingredients.
Take the Chengkouzhen plant. It is involved in the process of turning raw materials into raw aluminum, which will be hit by Mr. Trump’s tariffs.
But the same owner operates another plant — and that plant is still humming. That plant, in the city of Zouping 90 miles away, takes raw aluminum and turns it into car parts. Most of those won’t be affected by the tariffs.
Rolls of aluminum at a plant in Huaibei, China. China’s aluminum exports are rising, but at only a fraction of their earlier pace. CreditImagechina, via Associated Press
“Every day here, the factory is working as usual,” said Geng Peiguo, a 67-year-old in a reflective yellow safety vest who cleans the street in front of the parts factory. A loud clanging emerged from the factory, which was the size of several football fields.
Even before the tariffs, China’s vast steel exports to the rest of the world were falling, stemmed by Beijing’s efforts to shrink the industry as well as by improved demand at home. China’s aluminum exports are rising, but at only a fraction of their earlier pace.
China will not give up its old ways overnight, as some local officials look to bolster local employment and short-term economic growth. Even as the Chengkouzhen factory lies dormant, more raw aluminum operations are set to open. Morgan Stanley, the American bank, estimates that Chinese aluminum companies are set to expand capacity by 11 percent, though it noted that the government might discourage some of those projects.
Last year, Beijing propped up the publicly traded subsidiary of debt-laden Aluminum Corporation of China Limited, converting about $2 billion in loans into equity to be held by China’s state-controlled firms. The move was part of a broader effort to keep debt from hobbling the economy.
Still, China contends that it is addressing its wasteful factory problem and that American tariffs are unnecessary. Last week, the government-controlled association that oversees aluminum production called for retaliation against a wide variety of American products.
China accounts for only a small fraction of American aluminum and steel imports. As with the steel industry, aluminum manufacturers in the United States say China sends its cheap aluminum to other markets. That drives down global prices, and prompts producers elsewhere, notably Canada, to ship more to the United States instead.
Other Shores
China produces more than half of the world's steel and aluminum but exports only small amounts to the United States, thanks to strong demand at home, existing American tariffs and other reasons.
Note: Figures cover steel and aluminum imports in 2017 in categories subject to President Trump’s new tariffs.
The two factories, in Chengkouzhen and Zouping, show how Chinese officials will help some factories even as they allow others to close.
Their owner, Qixing Group, employs about 12,000 people across Shandong Province in eastern China. Qixing ran out of money after it overextended itself into real estate and other businesses. Last year it looked as if it might close.
The two factories then met different fates.
In Zouping, after some workers demonstrated, local officials stepped in. They helped provide two-thirds pay for the workers and get the company partly back in operation, according to two people familiar with the payments who asked not to be identified because the local authorities consider the matter sensitive.
An overhead cobweb of power lines connects power stations in Zouping to the city’s aluminum smelters.CreditGiulia Marchi for The New York Times
While it is not clear how many people Qixing employs in Zouping, the aluminum industry is a major presence. Factories owned by Qixing and others get power from a chain of huge coal-fired plants sporting 13 hourglass-shaped, 300-foot-tall cooling towers, about six times as many as a traditional coal plant. An overhead cobweb of ultra-high-voltage power lines connects the power stations to the city’s voracious aluminum smelters.
The Zouping factory’s workers are still nervous. They worry that the American tariffs will end up hitting the business, or that the government may decide to let the factory close after all. While the factory remains open, two of the four kilns at Qixing’s smelter in Zouping have been shut down.
“If Qixing goes bankrupt and my husband is laid off, how could we make a living?” said Liu Guifang, a full-time mother whose husband and sister work for Qixing. “I have a 13-year-old daughter and a 1-year-old son.”
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Zhang Hui, a Qixing electrician, criticized Mr. Trump’s tariffs. But he was just certified as a master electrician and plans to look for a job at an electronic devices manufacturer if Qixing shuts down entirely.
“I am very grateful to Qixing, which let me afford to buy an apartment and car and raise two sons,” Mr. Zhang said. “But I don’t feel appalled at Qixing’s current situation. It was going to happen at some point.”
In Chengkouzhen, local officials saw fewer reasons to keep the factory open.
The streets around the factory are silent. The factory, with its 15 hulking concrete silos as tall as eight-story buildings, used to import bauxite ore mined from West Africa and Australia. The factory would mix the ore with chemicals and heat it to separate alumina from the ore — the first step in producing raw aluminum.
When Ms. Li and her husband moved to Chengkouzhen five years ago from a town a half-hour’s drive inland, they thought that their new jobs would bring them firmly into China’s increasingly prosperous class of heavy-industry workers.
Then came the shutdown last spring. By late summer, with the equipment polished to a shine, maintenance duty became a mandatory holiday for all but a handful of workers. Autumn and then winter’s snows arrived, and the kilns at the factory never turned back on.
The remaining workers subsist on partial pay, commonly disbursed with government assistance in China to stem unrest. Some are paid to keep the lights on.
“We had heard the Qixing factory had good profits and offered high salaries,” Ms. Li said. “Who knew it would just collapse?”
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