Green Trade War Escalates: Solar Industry In A State Of Collapse

  • Date: 02/11/12
  • Emily Ford, The Times

China has fired the latest salvo in what experts are describing as an escalating global trade war in the solar industry, with an attack on the European Union over alleged unfair pricing and subsidies for solar panels.  The solar industry now finds itself in a state of collapse.

After the EU said in September that it would act on manufacturers’ complaints and investigate China for “dumping” solar panels – selling them overseas at a loss – Beijing yesterday retaliated by accusing the EU of the same offence, saying that it would also launch an investigation.

With its domestic solar industry in the throes of crisis, an aggrieved China in July declared that it would open anti-dumping investigations against South Korea and America, which in turn moved to impose steep taxes on Chinese solar panels over alleged unfair pricing.

These tit-for-tat incidents are the cause of widespread pain for the global solar industry, with solar panel-makers worldwide battered into consolidation and bankruptcy as the global slowdown leads countries to turn to cheaper sources of fuel, such as natural gas. [...]

A vast tide of billions of dollars of government-backed and private investment led the number of Chinese solar equipment manufacturers to balloon from the mid-2000s onwards. Yet the industry now finds itself in a state of collapse, owing to massive overcapacity and shrinking demand from its biggest customer, Europe, which accounted for €21 billion (£16.8 billion) of sales last year, or 60 per cent of its output.

Two of the biggest companies, LDK Solar and Suntech, have been forced to accept government bailouts and experts expect manufacturing output to halve in size in the next two years. Li Junfeng, a leading energy policymaker, last month described the once-booming sector as “a patient on life support”.

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