China-A top European Union official going into the Group of 20 meeting of the world’s most industrialized nations put pressure on China to curb its steel overproduction, which is emerging as the main irritant in Europe’s relations with the Asian nation.

Speaking at a news conference on Sunday the official, European Commission President Jean-Claude Juncker, said it is “crucial” for China to accept global monitoring of overcapacity in the steel sector.

Under a draft statement seen by The Wall Street Journal, G-20 nations are set to endorse the creation of a so-called Global Forum in steel overcapacity, with the involvement of the Organization for Economic Cooperation and Development. The text still needs to be approved by all leaders, and the references to steel overproduction were only reluctantly accepted by the Chinese and Indian delegations, according to a European official familiar with the talks.

Mr. Juncker, who oversees the European Union’s executive arm, which also acts as the bloc’s competition authority, reiterated that the body opened a series of antidumping probes into Chinese steelmakers. “Addressing the challenge of overcapacity in a credible manner will be the test case as the European Commission comes to assess the treatment of China in our anti-dumping and antisubsidy investigations.”

He said he was determined to “defend the interests of the European steel industry and its workers.” He added that the sector lost tens of thousands of jobs over the past few years in Europe, partly due to China not playing by the rules.

Currently the EU has 37 antidumping and antisubsidy measures in place in the steel sector, of which 15 concern Chinese companies.

European industries say that the Chinese industrial policies allow local producers to flood the European, U.S. and other developed markets with cheap steel products.

In a speech to a business forum on the eve of the gathering on Saturday, Chinese President Xi Jinping indirectly acknowledged and rebuffed foreign pressure on overcapacity in steel and coal, saying the steps toward reduction that China is taking are “most forceful” and that it is taking them on its own.

China, the world’s largest steel producer, has doubled its exports to the EU over the past two years, while the bloc’s demand languishes below levels seen before the 2008 financial crisis. EU steel prices have fallen roughly 40% over the past two years.

China produced 466 million tons of steel in the first seven months of this year, or half the world’s total output, according to the Brussels-based World Steel Association. It cut production a marginal 0.5% from the year-earlier period, while the rest of the world cut output 1.2%.

Source: Dow Jones