A flood of Chinese steel product exports is damaging to the country's market economy status, the head of the steel association said in comments at a conference in Beijing on Saturday.

China Iron and Steel Association Secretary General Liu Zhenjiang said the recovery in prices in 2016 had created a "vicious circle," driving up raw material costs and also production.

"Cutting steel capacity is important but controlling steel output is more important," he said.

China is seeking to be granted market economy status by the European Union, where its flood of steel exports, combined with new tariffs imposed on foreign imports, has prompted a fierce political debate, particularly in Britain.