Solar power trade war heats up

Angela Merkel steps in to quell fears over EU China trade links.

The sun doesn’t always shine on EU China trade links- German Chancellor Angela Merkel has had to step in to quell fears of an impending trade war over the price of imported solar panels from China.

The European Commission is expected to decide by 5th June whether or not to impose an antidumping tariff of 47 per cent on the import of Chinese solar panels, after several European manufacturers have argued that China puts them at a disadvantage by unfairly subsiding its solar panel manufacturers.

With Chinese exports of solar panels worth 21bn euros a year, the stakes are extremely high and has forced Angela Merkel to step in to ensure the import tariff doesn’t spark a trade war. She and Chinese Premier Li Keqiang have begun talks during his first overseas tour to try and resolve the EU’s largest ever trade dispute.

“We should very intensely use the next six months, and Germany will do everything to ensure that the talks will really advance," explained Merkel, with Mr Li adding;

“(Import tariffs) will not only harm jobs in China, as well as development in the affected industries, but it will also affect development and endanger industry in Europe".

The Chinese solar power industry has grown vastly over the past five years, with the country’s solar panel manufacturers grabbing 80 per cent of the global market at the expense of US and European companies.

Analysts fear that such rapid expansion in the solar industry in China will lead to a period of rationalisation if foreign export markets dry up. The US already imposed import anti-subsidy duties of 4 per cent in March, followed by antidumping duties of 31 per cent in May.

This has pushed Suntech Power, China and the world’s largest producer of solar panels to the brink. Despite having sold more than 13m solar panels around the world, in March the company announced it had defaulted on a $541m bond payment, with the state having to step in to keep things afloat. LDK Solar has also ran into trouble, having to sell a 20 per cent stake to state-run Hen Rui Xin Energy.

The actions of the American Ministry of Commerce led to China hitting back by announcing antidumping and anti-subsidy investigations into imports of solar-grade polysilicon from the US. Many fear that if the European Commission decides to push ahead with its tariffs, China will similarly retaliate again, leading to much internal disagreement between EU members over the proposed tariffs.

An unnamed source told the AFP agency that 17 member states "have come out in opposition" of imposing Chinese solar tariffs, including the UK and Germany, while others such as Italy and France are in favour.

These latest developments closely mirror the situation in China’s wind energy industry, which has seen exponential growth over the past decade, but hides a number of deep-seated problems. After years of double-digit growth things are slowing down for Chinese wind manufacturers. In December, the US Commerce Department set import duties for Chinese wind towers at over 50 per cent, again depriving manufacturers of a key export market and throwing the industry into jeopardy.

The domestic wind market is incapable of supplying enough demand to meet the country’s massive manufacturing overcapacity. Despite impressive headline figures of 62.4 gigawatts of installed capacity by the end of 2011, China’s growth in wind power is somewhat misleading. Some 10bn kilowatt-hours of electricity produced by wind turbines in the country could not be accepted by the grid last year because of oversupply, plus a quarter of the installed capacity is not yet even grid connected, according to Greenpeace. As a result, industry analysts expect many of the smaller manufacturers not to survive as the industry tries to balance supply and demand, despite the government subsidies that have helped spur growth until now.

With similar accusations of heavy state subsidies ongoing in several other industry, most notably telecoms, the sun won’t set on this trade war for some time yet

A solar field in China. Photograph: Getty Images

Mark Brierley is a group editor at Global Trade Media

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What I learnt when my wife and I went to Brexit: the Musical

This week in the media, from laughing as the world order crumbles to what Tristram Hunt got wrong – and Leicester’s big fall.

As my wife and I watched Brexit: the Musical, performed in a tiny theatre above a pub in London’s Little Venice, I thought of the American novelist Lionel Shriver’s comment on Donald Trump’s inauguration: “A sense of humour is going to get us through better than indignation.” It is an entertaining, engaging and amusing show, which makes the point that none of the main actors in the Brexit drama – whether supporters of Leave or Remain – achieved quite what they had intended. The biggest laugh went to the actor playing Boris Johnson (James Sanderson), the wannabe Tory leader who blew his chance. The mere appearance of an overweight man of dishevelled appearance with a mop of blond hair is enough to have the audience rolling in the aisles.

The lesson we should take from Brexit and from Trump’s election is that politicians of all shades, including those who claim to be non-political insurgents, have zero control of events, whether we are talking about immigration, economic growth or the Middle East. We need to tweak Yeats’s lines: the best may lack all conviction but the worst are full not so much of passionate intensity – who knows what Trump or Johnson really believe? – as bumbling incompetence. The sun will still rise in the morning (as
Barack Obama observed when Trump’s win became evident), and multi­national capital will still rule the world. Meanwhile, we may as well enjoy the show.

 

Danger of Donald

Nevertheless, we shouldn’t deny the risks of having incompetents in charge. The biggest concerns Trump’s geopolitical strategy, or rather his lack of one. Great power relations since 1945 have been based on mutual understanding of what each country wants to achieve, of its red lines and national ambitions. The scariest moments come when one leader miscalculates how another will react. Of all figures in recent history, the Soviet leader Nikita Khrushchev, with his flamboyant manner and erratic temperament, was probably the most similar to Trump. In 1962, he thought President Kennedy, inexperienced and idealistic, would tolerate Soviet missiles in Cuba. He was wrong and the world only narrowly avoided nuclear war.

How would Trump respond to a Russian invasion of the Baltic states? Will he recognise Taiwan as an independent country? Will he scrap Obama’s deal with Iran and support a pre-emptive strike against its nuclear ambitions? Nobody knows, probably not even Trump. He seems to think that keeping your options open and your adversaries guessing leads to “great deals”. That may work in business, in which the worst that can happen is that one of your companies goes bankrupt – an outcome of which Americans take a relaxed view. In international relations, the stakes are higher.

 

Right job, wrong time

I rather like Tristram Hunt, who started contributing to the New Statesman during my editorship. He may be the son of a life peer and a protégé of Peter Mandelson, but he is an all-too-rare example of a politician with a hinterland, having written a biography of Engels and a study of the English Civil War and presented successful TV documentaries. In a parallel universe, he could have made an inspirational Labour leader,
a more thoughtful and trustworthy version of Tony Blair.

No doubt, having resigned his Stoke-on-Trent Central seat, he will make a success of his new job as director of the Victoria and Albert Museum. If nothing else, he will learn a little about the arts of management and leadership. But isn’t this the wrong way round? Wouldn’t it be better if people first ran museums or other cultural and public institutions and then carried such experience into parliament and government?

 

Pointless palace

When the Palace of Westminster was largely destroyed by fire in 1834, thousands gathered to enjoy the spectacle. Thomas Carlyle noted that the crowd “whew’d and whistled when the breeze came as if to encourage it” and that “a man sorry I did not anywhere see”.

Now, with MPs reportedly refusing to move out to allow vital renovation work from 2023, we can expect a repeat performance. Given the unpopularity of politicians, public enthusiasm may be even greater than it was two centuries ago. Yet what is going through MPs’ minds is anyone’s guess. Since Theresa May refuses them a vote on Brexit, prefers the Foreign Office’s Lancaster House as the location to deliver her most important speech to date and intends to amend or replace Brussels-originated laws with ministerial orders under “Henry VIII powers”, perhaps they have concluded that there’s no longer much point to the place.

 

As good as it gets

What a difference a year makes. In January 2016, supporters of Leicester City, my home-town team, were beginning to contemplate the unthinkable: that they could win football’s Premier League. Now, five places off the bottom, they contemplate the equally unthinkable idea of relegation.

With the exception of one player, N’Golo Kanté (now at Chelsea), the team is identical to last season’s. So how can this be? The sophisticated, mathematical answer is “regression to the mean”. In a league where money, wages and performance are usually linked rigidly, a team that does much better than you’d predict one season is likely to do much worse the next. I’d suggest something else, though. For those who won last season’s title against such overwhelming odds, life can never be as good again. Anything short of winning the Champions League (in which Leicester have so far flourished) would seem an anti­climax. In the same way, the England cricket team that won the Ashes in 2005 – after the Australians had dominated for 16 years – fell apart almost as soon as its Trafalgar Square parade was over. Beating other international teams wouldn’t have delivered the same adrenalin surge.

Peter Wilby was editor of the Independent on Sunday from 1995 to 1996 and of the New Statesman from 1998 to 2005. He writes the weekly First Thoughts column for the NS.

This article first appeared in the 19 January 2017 issue of the New Statesman, The Trump era