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Xi's state visit to the UK overshadowed by Chinese steel dumping

Steel manufacturer Tata has announced 1,200 job cuts in the UK, stressing the damage caused by cheap Chinese imports. The announcement came at the start of Chinese President Xi Jinping's first state visit to the UK.

Caparo steel plant

Caparo's plant in Scunthorpe is one of several steel manufacturing locations, which has been forced to cut jobs recently

Steel manufacturer Tata blamed the layoffs in northern England and Scotland on a "flood of cheap imports, particularly from China," along with high electricity costs and the strong British pound. The timing of the announcement - on the first full day of

Chinese President Xi Jinping's state visit to the UK

- seemed designed to win maximum attention.

The announcement may pressure Britain to add the steel issue to discussions on trade, nuclear power and high speed rail between the countries. Indian multinational Tata, whose European operations include plants in the UK, the Netherlands, Germany, France and Belgium, said that in the past two years, imports of steel plate from China had quadrupled, as

China continued its practice of selling steel at a loss on international markets

.

Xi Jinping

Chinese President XiJinping arrived in London for a five-day state visit, which UK Prime Minister David Cameron hailed as the start of a golden time in bilateral relations

Politicians questioned Britain's relations with China in an urgent parliamentary session called after new British steel job losses were blamed on cheap Chinese imports, as Xi Jinping's procession approached Buckingham Palace.

Opposition lawmaker Kevin Brennan asked how the British government could secure the future of the UK steel industry in the face of China "dumping" steel on world markets, including Britain. President Xi was scheduled to address both houses of parliament, a rare honor, during his state visit.

Tata executive: threat will spread to Europe

Tata's chief executive for European operations, Karl Köhler, said that the UK steel industry was "struggling for survival" and called on the European Commission to do "much, much more to deal with unfairly traded imports."

"Inaction threatens the future of the entire European steel industry," he said.

Köhler added the industry had a crucial role to play in rebalancing the UK economy.

Union leaders were devastated by the job cuts as well: "I've worked here for 40 years and I don't know my future," said Paul McBean, from the Community union at Tata's Scunthorpe plant. "It's the same for a lot of people in there."

Further job cuts at other steel plants

The British government appears to be under increasing pressure to raise the issue of China selling steel at a loss on world markets. Tata's decision to cut jobs came after Sahaviriya Steel Industries announced the closure of its plant in Redcar last month, costing another 2,200 jobs.

Philip Hammond

UK Foreign Secretary Philip Hammond said that he would talk about the issue of Chinese steel exports with Chinese President Xi Jinping

Another company, Caparo Industries, went into partial administration on Monday, threatening hundreds more jobs.

China's steel exports were "certainly one of the things we'll be talking about," UK Foreign Secretary Philip Hammond told the BBC on Tuesday, while stressing that increased Chinese investment would stimulate the British economy and create jobs.

New investments to create jobs

The UK government rejected accusations saying it was pandering to China to secure investment during the visit - including a key role in

building nuclear power plants

in Britain. But British business secretary Sajid Javid said that Britain would announce 20 billion pounds ($31 billion, 27.3 billion euros) of business deals during Xi's visit.

"Alongside the Chinese visit this week we will also have an announcement of over 20 billion pounds of business deals that will support jobs throughout the country," he said.

Whether any of those funds would be made available to strengthen the steel industry remained unclear.

ss/msh (AP, Reuters)

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