Trade body: US distorts global solar market, hampers climate change battle

The China Photovoltaic Industry Association recently highlighted serious concerns and strong opposition over the US distorting the global solar market by providing excessive subsidies to US companies and imposing high tariffs on imported solar products, hampering international cooperation to battle the looming issue of climate change.

In a recent statement, the trade body said that the US has built high walls of protectionism by imposing multiple trade restrictions and continuously increasing tariff barriers on imported photovoltaic products. Such an example is that the country decided in May that the import tax on Chinese solar cells would rise from 25 percent to 50 percent.

The association also pointed out that the US implemented exclusive and discriminatory industrial policies through legislation such as the Inflation Reduction Act (IRA) and the Infrastructure Investment and Jobs Act (IIJA), and subsidized its own PV industry on a large scale.

"The Inflation Reduction Act, introduced in 2022, offers subsidies of an unprecedented $369 billion to support investments and production in the clean energy sector, including domestic PV products, aiming to reconstruct the PV industry chain…On May 16, 2024, the Department of Energy announced a $71 million investment, including $16 million from the IIJA, to fund the Silicon Solar Manufacturing and Dual-Use Photovoltaics Incubator program ($27 million) and the Advancing US Thin-Film Solar Photovoltaics funding program ($44 million), aiming to close gaps in PV supply chain manufacturing capabilities," it wrote.

It said such moves violated the multilateral trade rules and severely distorted the market operations of the global supply chain of the PV industry.

Experts and business leaders noted that while subsidies are common in the new energy industry globally, the US strategy of raising external tariffs under the name of anti-subsidy and financially backing local firms is double standard, with an aim to hinder Chinese solar companies from capturing global market share.

They said Chinese-made solar and wind power equipment have facilitated the widespread adoption of affordable renewable energy worldwide, contributing to a global shift towards green development. Collaboration among global economies is essential for mutual gains in this sector.

Cui Fan, an international trade professor at the University of International Business and Economics, said that policy interventions are necessary globally to address market flaws in advancing new energy. Solely relying on market forces could significantly delay global decarbonization progress by 20-30 years, out of sync with the pace of global green initiatives.

"However, in the WTO framework, subsidies must adhere to specific conditions, including avoiding unjust discrimination. The US' Inflation Reduction Act breaches this by favoring American products over Chinese imports," he said.

Lin Boqiang, the head of the China Institute for Studies in Energy Policy at Xiamen University, highlighted the US' larger new energy subsidies compared to China, despite consistently raising tariffs on Chinese goods under anti-subsidy pretexts, showcasing the US’ double standard.

Song Hao, assistant vice-president at GCL Technology Holdings Ltd, echoed these views, noting the detrimental effect of the US' contradictory actions of restricting imports under anti-subsidy claims while heavily supporting domestic solar industries, undermining fairness.

"China's solar industry boasts a robust supply chain, efficient manufacturing, and rapid innovation, positioning it as a global leader in this regard. Although the US has continuously raised trade barriers, it has limited impact on Chinese solar industry as China’s direct exports to the US is relevantly small. Chinese firms have diversified investments globally, forging stronger ties with Europe, the Middle East, and other regions to explore new opportunities," Lin said.

The US was absent from the top ten markets of China’s solar modules export in the first half of this year, while Europe and Asia collectively accounted for over 80 percent of these exports. Solar modules comprised 87 percent of China’s total PV product exports in terms of value, according to the CPIA.

The association said that the Middle East is emerging as a key destination for Chinese solar companies' venturing overseas, while Africa is becoming one of the fastest-growing regions for Chinese solar exports with a 57 percent year-on-year increase last year.

Huge Illegal Subsidies on U.S. Solar Industries Distort Global PV Market