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

Photo: Getty
Show Hide image

The campaign to keep Britain in Europe must be based on hope, not fear

Together we can show the world a generous, outward-facing Britain we can all be proud of.

Today the Liberal Democrats launched our national campaign to keep Britain in Europe. With the polls showing the outcome of this referendum is on a knife-edge, our party is determined to play a decisive role in this once in a generation fight. This will not be an easy campaign. But it is one we will relish as the UK's most outward-looking and internationalist party. Together in Europe the UK has delivered peace, created the world’s largest free trade area and given the British people the opportunity to live, work and travel freely across the continent. Now is the time to build on these achievements, not throw them all away.

Already we are hearing fear-mongering from both sides in this heated debate. On the one hand, Ukip and the feuding Leave campaigns have shamelessly seized on the events in Cologne at New Year to claim that British women will be at risk if the UK stays in Europe. On the other, David Cameron claims that the refugees he derides as a "bunch of migrants" in Calais will all descend on the other side of the Channel the minute Britain leaves the EU. The British public deserve better than this. Rather than constant mud-slinging and politicising of the world's biggest humanitarian crisis since the Second World War, we need a frank and honest debate about what is really at stake. Most importantly this should be a positive campaign, one that is fought on hope and not on fear. As we have a seen in Scotland, a referendum won through scare tactics alone risks winning the battle but losing the war.

The voice of business and civil society, from scientists and the police to environmental charities, have a crucial role to play in explaining how being in the EU benefits the British economy and enhances people's everyday lives. All those who believe in Britain's EU membership must not be afraid to speak out and make the positive case why being in Europe makes us more prosperous, stable and secure. Because at its heart this debate is not just about facts and figures, it is about what kind of country we want to be.

The Leave campaigns cannot agree what they believe in. Some want the UK to be an offshore, deregulated tax haven, others advocate a protectionist, mean-hearted country that shuts it doors to the world. As with so many populist movements, from Putin to Trump, they are defined not by what they are for but what they are against. Their failure to come up with a credible vision for our country's future is not patriotic, it is irresponsible.

This leaves the field open to put forward a united vision of Britain's place in Europe and the world. Liberal Democrats are clear what we believe in: an open, inclusive and tolerant nation that stands tall in the world and doesn't hide from it. We are not uncritical of the EU's institutions. Indeed as Liberals, we fiercely believe that power must be devolved to the lowest possible level, empowering communities and individuals wherever possible to make decisions for themselves. But we recognise that staying in Europe is the best way to find the solutions to the problems that don't stop at borders, rather than leaving them to our children and grandchildren. We believe Britain must put itself at the heart of our continent's future and shape a more effective and more accountable Europe, focused on responding to major global challenges we face.

Together in Europe we can build a strong and prosperous future, from pioneering research into life-saving new medicines to tackling climate change and fighting international crime. Together we can provide hope for the desperate and spread the peace we now take for granted to the rest of the world. And together we can show the world a generous, outward-facing Britain we can all be proud of. So if you agree then join the Liberal Democrat campaign today, to remain in together, and to stand up for the type of Britain you think we should be.