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

Ukip's Nigel Farage and Paul Nuttall. Photo: Getty
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Is the general election 2017 the end of Ukip?

Ukip led the way to Brexit, but now the party is on less than 10 per cent in the polls. 

Ukip could be finished. Ukip has only ever had two MPs, but it held an outside influence on politics: without it, we’d probably never have had the EU referendum. But Brexit has turned Ukip into a single-issue party without an issue. Ukip’s sole remaining MP, Douglas Carswell, left the party in March 2017, and told Sky News’ Adam Boulton that there was “no point” to the party anymore. 

Not everyone in Ukip has given up, though: Nigel Farage told Peston on Sunday that Ukip “will survive”, and current leader Paul Nuttall will be contesting a seat this year. But Ukip is standing in fewer constituencies than last time thanks to a shortage of both money and people. Who benefits if Ukip is finished? It’s likely to be the Tories. 

Is Ukip finished? 

What are Ukip's poll ratings?

Ukip’s poll ratings peaked in June 2016 at 16 per cent. Since the leave campaign’s success, that has steadily declined so that Ukip is going into the 2017 general election on 4 per cent, according to the latest polls. If the polls can be trusted, that’s a serious collapse.

Can Ukip get anymore MPs?

In the 2015 general election Ukip contested nearly every seat and got 13 per cent of the vote, making it the third biggest party (although is only returned one MP). Now Ukip is reportedly struggling to find candidates and could stand in as few as 100 seats. Ukip leader Paul Nuttall will stand in Boston and Skegness, but both ex-leader Nigel Farage and donor Arron Banks have ruled themselves out of running this time.

How many members does Ukip have?

Ukip’s membership declined from 45,994 at the 2015 general election to 39,000 in 2016. That’s a worrying sign for any political party, which relies on grassroots memberships to put in the campaigning legwork.

What does Ukip's decline mean for Labour and the Conservatives? 

The rise of Ukip took votes from both the Conservatives and Labour, with a nationalist message that appealed to disaffected voters from both right and left. But the decline of Ukip only seems to be helping the Conservatives. Stephen Bush has written about how in Wales voting Ukip seems to have been a gateway drug for traditional Labour voters who are now backing the mainstream right; so the voters Ukip took from the Conservatives are reverting to the Conservatives, and the ones they took from Labour are transferring to the Conservatives too.

Ukip might be finished as an electoral force, but its influence on the rest of British politics will be felt for many years yet. 

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