SIMON WATKINS: It's time to show our mettle on steel as Chinese imports create a British crisis

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British steel plants must live or die by market forces, some say. It would be folly, they argue, to use public money to keep open loss-making steel plants that private companies are unwilling to support.

On the face of it this appears to make sense in a tough-minded kind of a way. But it is utter nonsense.

The crisis facing the UK steel industry is due in large part to cheap steel being imported from China, which has gone from being a relatively small player in global steel markets just 20 years ago, to being the single biggest global producer – thanks to grand central planning and support by the one-party Chinese state.

The crisis facing the UK steel industry is due in large part to cheap steel being imported from China

The slowdown in China's own economy means lower demand in their home market for steel and the result has been more exports to the West – and much lower prices.

China's steel industry is substantially owned and run by its government. It is also substantially loss-making. In fact, Chinese steel companies lost almost £5.5billion in the first ten months of last year alone.

But that Chinese steel industry is backed by a government which remains nominally communist.

The British Government can decide not to intervene and allow Port Talbot to close.

It might even be able to argue that EU rules stop it doing anything else, though other EU countries including Belgium and Italy have aided their steel industries and decided to fight the bureaucrats after the event. 

But British politicians cannot argue that Port Talbot must be allowed to close because it is the 'free-market' thing to do.

The idea that there is any such thing as a global free market in steel is a swivel-eyed fantasy.

The fact is that a vast communist state-backed industry is producing millions of tons of steel at a loss. It is doing so using dirty coal which would never be possible in 'green-minded' Britain where carbon emissions are highly taxed. This cheap steel from a polluting communist autocracy is flooding our market and driving British steel mills to closure.

But apparently we cannot use public money to keep Port Talbot open because it would be a betrayal of the free market? Explain that to me again.

We have seen similar patterns in other old industries. For example, coal mining has all but closed down in the UK, but we continue to import it significantly from Russia.

It was often said that while Britain won the Second World War, Germany with its remarkable industrial renaissance won the peace. Could future historians eventually ask how did the West win the Cold War but lose the Cold War peace?