China, EU to set up mechanism to fight steel overcapacity - Chinese foreign minister

ULAANBAATAR (Reuters) - China and the European Union agreed to establish a bilateral mechanism to deal with overcapacity in steel, Chinese Foreign Minister Wang Yi said on Thursday.

China is by far the world's biggest steel producer and its annual output is almost double that of the 28-nation EU.

Rival producers have accused China of selling into export markets at below cost after a slowdown in demand at home, causing a crisis for the industry that has led to job cuts and plant closures.

"Through this bilateral mechanism, the two sides can have ... in-depth discussions to find solutions acceptable to both parties and in this way maintain free trade and sustainable development of the global economy," Wang said.

Wang did not provide details on the planned mechanism. He was speaking during a bilateral meeting with EU foreign policy chief Federica Mogherini on the sidelines of an event in the Mongolian capital Ulaanbaatar.

(Reporting by Steve Wang and Sue-Lin Wong; Editing by Gareth Jones)