So says a new report, “No Paper Tiger,” issued by the Economic Policy Institute. Further, notes author Usha Haley, “Since 2000, China has increased paper production three-fold to assume a leading role in the global paper industry” which adversely affects the US paper industry.
Interestingly, the report notes that China’s natural resources can’t keep pace with the rapidly growing industry. Instead, to fuel its burgeoning paper industry China has become the largest importer of pulp and recycled paper. Further, domestic paper demand in China is minimal — thus China’s drive to export paper globally.
According to Haley, “China’s rapid rise in the global paper industry has been fueled by over $33.1 billion in government subsidies from 2002 to 2009.” The government subsidies and interest-free loans offered by China are the backbone of the expansion and help paper businesses cover the costs of electricity, coal, pulp and recycled paper. Ultimately, these subsidies have made it difficult for American companies to compete. Chinese paper products sell at a much lower price as compared to U.S. or European paper.
Ultimately, papermakers in Wisconsin content these subsidies affect their businesses as well. NewPage Corp, a paper company with facilities in Wisconsin Rapids, Biron, Whiting and Stevens Point filed an unfair trade case — along with two other papermakers and the United Steelworkers Union — in September with the U.S. Department of Commerce and International Trade Commission. The suit contends that these subsidy and price issues have played a role in some of the job losses and plant closings in the region. A final decision has not yet been reached.