And while the Chinese government has not imposed new taxes on steel imports yet, anti-dumping measures are under consideration, a Tianjin-based analyst with a domestic steel company said. Sliding steel prices in Korea and Japan, two major steel producing and consuming countries, have driven China's steel prices down, particularly on flat steel products, the paper reported.

Korea and Japan are major producers of rolled and flat steel products, markets China is trying to develop domestically, a Shanghai-based consultant with a major international firm said.

Korean and Japanese prices for cold and hot rolled steel exported to Europe have fallen 10%-20% since the middle of last year, the paper said. Prices for Chinese 1998 hot rolled steel imports fell 4% from the second half of 1997, while prices forcold rolled steel imports fell 4.4%, the paper reported.

Cheap flat steel imports into China could sharply curb Baoshan Steel Co.'s profits again this year, he said. Baoshan Steel, China's largest and most profitable steel company, saw profits slide 37% on the year in 1997 after a plunge in steel prices in the second half of the year on Asian financial woes.

"Baoshan steel is the only major producer (of flat steel) in China, and its products don't have the durability or strength of Korean or Japanese products," he said. "Cheap imports will keep hurting Baoshan."

"Protective (anti-dumping) measures would make sense," said the Shanghai consultant. In addition, reduced steel demand in Southeast Asia in the wake of the regions economic crisis is forecast to curb import demand by five million tons in 1998. That and competition from other Asian steel producers could cut into China's steel export market, previously an engine of growth, the paper reported.

Official reports said that China's steel exportsgrew 19% in 1997.