EU-China solar deal averts crisis, benefits world

BEIJING - The amicable solution to a dispute between the European Union (EU) and China over solar panels has prevented a full-scale showdown between the two major trade partners and provided a chance for both sides to review their policies on related industries.

For China's photovoltaic (PV) industry, as some experts have already pointed out, a lack of technical innovation, improper planning, misreading of market trends, and blind expansions are among the problems that demand urgent attention and quick solution.

Since China's PV sector heavily relies on foreign countries' subsidy policies to maintain a high profit margin, it is vulnerable to external changes.

Therefore, upgrade and adjustment is badly needed for the industry to enhance its core competitiveness via technological improvement.

On the world stage, major countries are keen to develop low-carbon economies via clean energy in the post-financial crisis period. Without a proper settlement to the China-EU solar panel dispute, both sides would have suffered trade and industry losses and the hard-won cooperative momentum on clean energy between the two sides would also have been set back.

The development of clean energy in the EU was affected by the bloc's debt crisis, with some EU members ending subsidies to PV and other related industries.

This explains why the solar panel dispute started in the first place. Some industries and people in the EU may have thought that, by imposing extremely high tariffs on Chinese solar panels, the pressure could be passed on to China.

However, such a tactic won't benefit the EU.

The Alliance for Affordable Solar (AFASE) of Europe has said it was the axed solar feed-in tariff, not the competition from China, that led to the European PV industry problems.

Moreover, the PV industry accounts for 7 percent of EU-China trade volume, and some estimates show that, if the dispute had remained unresolved, the EU would have suffered as much as China in trade and employment terms. With such a scenario ahead, it is no surprise most EU members voted "no" to planned punitive duties on Chinese solar imports and thousands of European PV firms were opposed to such moves.

At a time when the EU is still mired in an economic downturn and China is in great need of technical upgrades, a potential trade war over solar panels between the two key players in combatting global climate change would have hurt the world's confidence in clean energy.

In the end, the amicable solution to solar panel case has not only saved both sides from a potential crisis in trade ties, but also shown neither side is willing to miss the opportunities to develop clean energy, which is good news for the world's clean energy industry.