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Solar Panel Trade War Heats Up

Posted by timothy on from the remember-to-only-accept-domestic-subsidies dept.

Hugh Pickens writes "Reuters reports that Chinese solar companies could soon find themselves bereft of some of their biggest foreign markets as Western manufacturers intensify a solar trade war and seek stiff anti-dumping duties on low-cost Chinese products. German group SolarWorld says it is working on steps to curb alleged price dumping by Chinese rivals in Europe as a group of seven U.S. solar companies urges the U.S. government to slap anti-dumping duties on Chinese-made solar energy products. Western solar companies have been at odds with their Chinese counterparts for years, alleging they receive lavish credit lines to offer modules at cheaper prices. 'American solar operations should be rapidly expanding to keep pace with the skyrocketing demand for these products,' says Senator Ron Wyden of Oregon whose office authored a whitepaper called 'China's Grab for Green Jobs.' (PDF) 'But that is not what has been happening. There seems to be one primary explanation for this; that is, that China is cheating.'"

10 of 232 comments (clear)

  1. Yeah... Cheating... Sure... by Anonymous Coward · · Score: 5, Insightful

    And China was cheating no doubt with making cheap Reeboks and Nike's and stuff for US multinationals... Oh yeah, sorry, forgot. Those were US owned Multinationals getting all the profit then.

    I guess the difference between dumping and competing is whether you're ripping off the consumer and greedy multinational corporations are soaking up all those tax-free dollars or not.

    1. Re:Yeah... Cheating... Sure... by antifoidulus · · Score: 5, Interesting

      Pretty much. Japan had very similar policies in the 60s and 70s, but didn't have any pressure placed on it until the 80s after Japan decided to cut the western CEOs out of the profit loop entirely and sell direct to consumers. When it was just regular people losing their jobs, politicians didn't do much other than pay some obligatory lip service. However, as soon as the CEOs started to get cut out of the loop, the ostensibly pro "free-trade" Republicans were more than willing to slap sanctions on Japan and put immense pressure on them to appreciate their currency.

      Now compare the situation with Japan in the 80s to modern-day China. While a lot of the trade restrictions and currency manipulations are the same, one major difference is that there are very, very few Chinese companies selling directly to western consumers. Off the top of my head I can think of 3 Chinese companies with any sort of real presence in the western market, Lenovo, Haier, and Huawei, and of those only Lenovo is anywhere near the top of their respective markets. However I can think of at least a dozen Japanese companies who do so, Sony, Nintendo, Toshiba, Hitachi, Fujitsu, Panasonic, Honda, Toyota, Nissan, Mitsubishi, Sharp, and Olympus, and I'm missing a ton I'm sure.

      I think China has intentionally discouraged it's companies from selling directly to the west, at least in large numbers, specifically to prevent what happened to Japan from happening to them. They realize that in order to keep exporting massive amounts of goods to the US, they need to make sure the people who really call the shots, the executives, stay well-paid.....

      --
      Monstar L
    2. Re:Yeah... Cheating... Sure... by jbengt · · Score: 4, Insightful

      And how is that different from the US?

      US currency value is determined on the open market.
      Chinese currency is not.

    3. Re:Yeah... Cheating... Sure... by chrb · · Score: 4, Interesting

      The Chinese government actually subsidizes very few industries - unless you count pegging the currency against the dollar, which is another issue. The real reason Chinese goods are cheaper is that the average Chinese factory worker gets paid about $200 a week for around 100 hours of work. That's $0.50 an hour. That kind of price advantage is enough to ensure dominance in most fields of manufacturing.

      There is also an important reason why China wants to promote the solar industry - the sustainable energy industry is of strategic importance to the Chinese. By 2015, 70% of China's oil imports will come from the Middle East oil - a region where U.S. interests have historically been dominant and where China has had no long-standing strategic interests. Simply put, the Chinese want to avoid becoming overly reliant on oil supplies from governments that are allied with the U.S..

      This article makes an obvious point regarding government subsidies: "China floated $30 billion in subsidies to its solar sector? Wow, that’s so totally unfair. Why, the US would never stand for such a thing! That’s why Obama included almost $40 billion in green-sector subsidies as part of his 2009 Porkulus package, of which $17 billion has already been spent. And let’s not forget that over a half-billion dollars of that money got spent specifically on Solyndra alone." So, subsidies are okay when the U.S. does it, but bad when China does it?

    4. Re:Yeah... Cheating... Sure... by Kagetsuki · · Score: 4, Interesting

      Well what Japan did was they basically reduced prices by absorbing a lot of the production costs through interest free loans, which were given through banks and in turn approved by the government. That's another way of saying the Japanese government gave money to companies to produce superior products and cheaper prices than their competitors could in a "fair" market. For example each roll of Fujifilm film was cheaper than Kodak yet the film grade was higher. Why do this? Well, Kodak almost went bankrupt and that would have left Fujifilm the only real film supplier in the world, with a trusted name and a global following of people who equate film to Fujifilm as tissues are to Kleenex. From that point the price would increase, but even rising up to the price Kodak was running at they would have close to 100% of the market so profits would have been guaranteed.

      Thing is Kodak complained, as did a lot of other companies that were being crushed, and then all the sudden the Japanese were doing something "unfair". Weather or not it's really unfair to do that is sort of a funny issue - the government is basically backing loans with tax money, making a bet that they can push their national industries into absolute and controlling positions in the global market and thusly gaining a greater sum economic return. That's pretty risky and pretty dynamic, but had foreign governments not stepped in a bitched about it it would have worked and nobody would remember the companies Kodak et.all ever existed.

      China on the other hand is doing something a bit different. In the case of solar panels for example they are restricting exports of vital production materials while washing the prices down for national producers. They may well be able to pull it off as well - even if global governments bitch and scream and make up new rules China still has a lot of options on the table to drive down prices and their economy is so massive and so based on nonsense bullshit, not to mention they're not afraid of turning the rich among their population into dirt farmers, that they will make any move they feel necessary with little hesitation.

    5. Re:Yeah... Cheating... Sure... by whereiswaldo · · Score: 4, Insightful

      they compete simply by price

      By simple, do you mean saving money by slave wages, no human rights, and abhorrent environmental policies and passing the savings on to the buyer?

      We should have heavy tariffs on everything from China until they clean up their act.

  2. Re:Not dumping prices, but toxic stuff by tp1024 · · Score: 4, Interesting

    This is basically what is going on and not just in solar cells but also in rare earth minerals. Similar problem. Low concentrations demand leaching with rather aggressive and toxic chemicals, that are expensive to capture and recycle. Importing them from China in the name of Free Markets has no different result as producing them in the USA and dumping the waste on China.

    The whole "buy Chinese stuff and blame them for their CO2 emissions" business is yet another example.

  3. Re:Cheating? Free market? how does this work? by Moryath · · Score: 5, Interesting

    Cheating:

    - Governmental currency manipulation which is pretty much a certainty.

    - "Product Dumping", e.g. selling a product at below production cost (either by simply eating the loss or cutting corners and dumping an inferior, unsafe product) so as to drive competitors out of the market and then price-gouge once you're the only supplier (already seen in some markets where China did, in fact, run US companies out of business)

    - Rampant theft of intellectual property - we're not just talking Napster-grade "file sharing" here, we are talking about rampant spying and thievery of patented products and designs. As the last article I link shows, it's not just the US getting burned by the Chinese - this is a major point of concern in the EU as well.

    Are you getting some form of a clue now?

  4. Re:Explanation is clear by Rakshasa-sensei · · Score: 5, Interesting

    If they are excessive... How come Germany and the rest of Norther Europe is doing so damn well?

    One of the secrets is the universal health care and other social programs, which in fact reduce the overall cost of employment in society by making employees more efficient and cutting out parasites like health insurance companies. (Healthcare cost is 6-8% versus 17% in the US, and there's no 'insurance' companies taking 30% cut in pure profits out of healthcare spending)

  5. Re:Amusing. Americans think the enemy is over ther by Anonymous Coward · · Score: 5, Interesting

    On May 2nd, 1933, the day after Labor day, Nazi groups occupied union halls and labor leaders were arrested. Trade Unions were outlawed by Adolf Hitler, while collective bargaining and the right to strike was abolished.

    Lenin, at the behest of Stalin and Trotsky, banned trade unions in favor of "total government union." Stalin followed this up by increasingly draconian laws that docked a worker 25% of a day's pay for being a mere 20 minutes late to work, and imposed prison sentences for anyone who attempted to quit their assigned job.

    Chairman Mao eliminated trade unions, in a move very reminiscent of Stalin. More recently, China created the "All China Federation of Trade Unions", a front organization whose primary purpose is to serve as an enforcement arm of the Chinese Communist Party. No actual trade unions or labor bargaining are allowed to exist.

    In 2011, in multiple states in the US, the Republican Party... abolished unions.