LONDON—A move by Tata Steel, the second largest steel producer in Europe, to end operations in Britain because of heavy losses is the latest in the growing list of the causalities of China’s economic slowdown. The prospect of massive layoffs by Tata Steel, which acquired British-Dutch steel company Corus Group in 2007 at a high premium, has arisen during the run-up to the referendum on British exit from the European Union. Such are the ripples of globalization that China’s economic downturn brings impact to distant shores.
After falling from 10.4 percent in 2010 to 7.4 percent in 2012, China’s growth rate has hovered around 7 percent. This is the consequence of the Communist leadership’s decision in November 2013 to rebalance the economy by moving away from heavy reliance on investment and exports to domestic consumption-driven growth. The resulting slowdown has affected the suppliers of coal, iron ore, and oil to China as well as the foreign consumers of the products of China’s capital-intensive industries because of overcapacity in the wake of diminished domestic demand.
China’s dominant reliance on coal-fired electricity has made it the world’s top coal producer, consumer, and importer, accounting for almost half of global coal consumption. Its net import of 46 million tons of coal in 2008 rose to 265 million in 2014. That then fell by almost a third in 2015. In September of that year Chinese President Xi Jinping announced that his country would introduce a national cap-and-trade system to limit carbon emissions, starting in 2017.
