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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Emmanuel Macron's French election victory may change less than most expect

The centrist is not the first to succeed from outside the traditional parties in the Fifth Republic.

Emmanuel Macron has won the first round of the French presidential election, and will face Marine Le Pen in the run-off.

The numbers that matter: Emmanuel Macron 24 per cent, Le Pen 21 per cent, François Fillon 19.9 per cent, Jean Luc Mélenchon 19.9 per cent and Benoît Hamon 6.3 per cent.

According to the polls - which came within 0.9 per cent of the correct result in the first round - Macron will easily defeat Marine Le Pen in the second round.

The single transferable take that compares Macron to Hillary Clinton and Le Pen to Trump ignores a few things. Not least his programme, the different electoral system and the fact that Macron is popular - the most popular politician in France, in fact. Jean Luc Mélenchon declined to back a candidate in the second round and will poll his supporters on who his leftist bloc should back. But it's not comparable to the feud between Bernie Sanders and Clinton - which, in any case, was overwritten. Most Sanders supporters backed Clinton in November. The big story of that election was that the American mainstream right backed Donald Trump despite his manifold faults.

The French mainstream right is a very different beast. Fillon has already thrown his weight behind Macron, warning against the "violence" and "intolerance" of the National Front and the "economic chaos" its programme would inflict. And to the extent that it matters, Hamon has also endorsed his former party colleague, saying that there is a difference between a "political adversary and an enemy of the Republic."

So, if he wins, has everything changed, changed utterly? That's the line in most of the papers this morning, but I'm not so sure. French politics has always been more fissiparous than elsewhere, with parties conjured up to facilitate runs for the Presidency, such as the Democratic Movement of perennial candidate, now Macron backer François Bayrou, and Mélenchon's own Left Party.

I'm dubious, too, about the idea that Macron is the first to succeed from outside the traditional centre-right and centre-left blocs in the history of the Fifth Republic. That honour surely goes to Valéry Giscard d'Estaing, a popular finance minister in a Gaullist administration, who ran on a independent centrist platform in 1974 - and won the presidency.

Giscard d'Estaing had no majority in the National Assembly and had to "cohabit" with his former colleagues on the Gaullist right. In the long run, far from upending the left-right pattern of French politics, he continued it. (Indeed, d'Estaing is now a member of the centre-right Republican Party.)

You don't have to look hard to see the parallels with Macron, a popular finance minister in a Socialist administration, running on an independent centrist platform and very likely to win, too.

France's underreported and under-polled legislative elections in June will give us an idea of the scale of the change and how lasting it may be. If, freed from the taint of Fillon's scandals, the French Republicans can win the legislative elections then talk of the "death of the traditional centre-right" is going to look very silly indeed.

Equally, while Hamon won the presidential nomination, the Socialist Party's legislative candidates are largely drawn from the party's right. If En Marche!, Macron's new party, can go from no seats at all to the largest group but are short of a majority their natural allies in getting through Macron's programme will be from the remains of the Socialists. Far from irrevocably changing the pattern of French politics, Macron's remarkable success may simply mark a period of transition in the life of the French Left.

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.

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