Baosteel president Xu Lejiang says he has ”full confidence” in China’s economic development but says the nation will need to switch from investment to consumption-led growth as soon as overseas markets recover.

Mr Xu, who in September last year was one of the first to warn the
world that the Chinese economy ”was on the slide”, told BusinessDay
yesterday that the Government’s huge stimulus policy had countered a
”once in-a-century crisis” but would have to be unwound as soon as
China returned to sustained export growth.

”This will be revised after the international economy improves,” he
said, following a Beijing signing ceremony to mark Baosteel’s $286
million investment in Aquila Resources.

”Investment shouldn’t be that big,” he said. ”Sustainable growth can be achieved only when consumption is the driver.”

Baosteel’s 15 per cent stake in Aquila Resources was agreed in August
and approved by Australia’s Foreign Investment Review Board on October
29 and by China’s National Development & Reform Commission on
November 13.

Asked whether he would lift his investment from 15 per cent to 19.99
per cent, Mr Xu said: ”Whenever there is a suitable opportunity, why
not?”, provided governments agreed.

Mr Xu (pictured below), said Baosteel was a ”conservative” investor
but had high ambitions for Aquila developing five major prospects
within the next four years and becoming the ”dominant producer”.

But he rejected suggestions by a China Central Television reporter that
Baosteel’s stake in Aquila would enhance Baosteel’s bargaining power in
the coming iron ore price negotiations. ”No, you can’t say that,” he
said, ”because Baosteel is representing the industry … and this
contract is too small to have an impact.”

At the same Beijing venue, Luo Bingsheng, the vice-president of the
China Iron & Steel Association, who has previously led a media
assault on the iron ore negotiations, said he wanted a lower profile. ‘

”Baosteel has always been China’s representative to the negotiations and CISA has been the industry’s co-ordinator,” he said.

Source: The Age

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