Solar panels: latest hot spot in US-China trade tensions
There are many things China comes under fire for when US politicians take the stage: stealing American jobs is an old favourite, as is “manipulation” of the renminbi to keep Chinese manufacturing cheap. Then there are the exports of toxic petfood, or lead-coated children’s toys. But the latest broadside from Capitol Hill hits out at a new, and somewhat surprising, target: cheap Chinese solar panels being installed on American homes.
The attack comes from Senator Ron Wyden (D., Oregon), who alleges that Chinese-made solar panels are unfairly subsidised by the state and hurting American businesses. His charge, whether true or not, speaks to the growing concerns within the US as China – now the world’s top maker of solar panels and wind turbine – becomes increasingly competitive in the clean energy sector.
Wyden calls for the US to impose tariffs on imports of Chinese solar panels and pursue litigation against Chinese solar panel maker at the World Trade Organization. In a letter to President Obama, he compares importing Chinese solar panels to being reliant on imports of foreign crude oil:
Our view of energy independence does not entail substituting America’s reliance on Middle Eastern oil with a dependence on Chinese solar panels. Without strong enforcement of US trade statutes, however, that is just what will happen.
As solar panel makers around the world have been struggling with falling panel prices and slowing demand, Wyden writes that Chinese solar panel makers are causing “injury” to American panel makers:
Advanced producers—whether they are American, Japanese or European— are losing market share in almost every growing market to Chinese producers. Chinese imports of solar panels are surging and are on pace to increase 240 percent this year, compared to 2010. Furthermore, imports of Chinese solar panels increased 1,593 percent between 2006 and 2010. We need only look at the bankruptcies of major American innovators and producers of solar panels to see the material injury these imports appear to be inflicting on our domestic industry.
While it is true that US solar panel makers have been hurting this year—three US solar companies have filed for bankruptcy in the last month—Chinese solar panel makers have been feeling pain too.
Share prices of Suntech and Trina, two of China’s biggest producers, are down 44 per cent and 51 per cent, respectively, since the beginning of this year, reflecting negative industry sentiment. Although revenues for both companies grew in the first half of this year, analysts believe that overcapacity and slowing demand growth will squeeze all solar panel producers in coming months. Those same analysts have been predicting “consolidation”—i.e. bankruptcies and mergers – for some time.