China’s new five-year plan for its solar industry threatens to further incapacitate U.S. domestic and world market share, an industry group warned.
"The Chinese government launched a trade war against the U.S. domestic industry, took over the leadership of the largest American industry trade association and began driving U.S. solar manufacturing pioneers out of business," said Gordon Brinser, president of SolarWorld Industries America, the largest U.S. solar manufacturer, and a member of the Coalition for American Solar Manufacturing (CASM).
"China is steamrolling American manufacturing and jobs and breaking its trade commitments in plain sight," he added. "No wonder the American public has grown increasingly anxious about the state of U.S.-China trade. China is scoffing at international trade rules."
China’s five-year plan, released in February, calls for a number of government initiatives, including new policy, financial and price subsidies; more support in industry, financial and tax policy; and further aid with development and production of equipment used to produce polysilicon, silicon ingots, wafers, cells and panels within the crystalline-silicon solar industry. It also includes support for industrialization of China's undeveloped thin-film industry, specifically harnessing silicon and copper indium gallium diselenide solar technologies.
CASM recently commissioned an analysis of China’s five-year plan by Washington-based law firm Wiley Rein.
"These plans significantly increase the (Chinese) government's control over the development of the solar industry, permitting the government to manage virtually every aspect of the industry," the analysis said. "Substantial government assistance is also mandated to carry out the goals identified in these plans."
As in previous iterations, the plan designates solar among seven "strategic emerging industries" that warrant massive government support, preferential treatment and tight control, according to the analysis. News reports put total subsidies for all seven industries at $1.5 trillion. The recently published solar plan, which covers the period through 2015, reflects the Chinese government's resolve to ensure the industry's continued rapid development by directly managing its planning, policy and growth.
The Wiley Rein analysis also said the solar five-year plan calls for the Chinese industry's continued global expansion and "internationalization" in keeping with China's "Going Abroad" strategy.
China has amassed production capacity that is 32-times greater than domestic demand, resulting in about 95 percent of Chinese solar production being exported overseas. CASM said China's subsidies of its exports has enabled its solar industry to “dump product in the U.S. market and unfairly capture market” share since 2008. During the same period, the number of China's solar manufacturers listed among the world's 10 largest has skyrocketed from just one to seven in 2011. Meanwhile, at least 12 crystalline silicon U.S. manufacturers have closed plants, declared bankruptcy or carried out layoffs, the association said.
The federal government’s National Renewable Energy Laboratory has concluded that Chinese producers face a cost disadvantage in producing and delivering solar technology to the U.S. market, compared with domestic producers.
However, the U.S. solar industry has started fighting back. In a partial preliminary determination in March, the Commerce Department announced that at least 10 categories of Chinese subsidies for its producers of solar cells and panels were illegal.
CASM has identified more than 30 Chinese subsidy programs. China’s new five-year plan for the solar photovoltaic industry includes a host of new government initiatives to continue to fuel China's solar export campaign, according to the Wiley Rein analysis. These include:
- Where new industrial siting should take place.
- Precise levels for environmental performance improvement.
- Precise standards for cost and power-conversion efficiency improvement.
"Our coalition of U.S. producers contested the illegal Chinese governmental interference in the U.S. market and sought enforcement of U.S. and international trade law. In response, China has rolled out a host of initiatives to further manipulate pricing, snuff out competition and solidify its domination – all on foreign soil,” CASM said. “Needless to say, China allows no foreign competition on its own soil."
In the first major ruling in the trade cases, the U.S. International Trade Commission issued a unanimous preliminary ruling on Dec. 2 that concluded Chinese trade practices are harming the U.S. domestic solar industry. On May 17, the Commerce Department is expected to announce the extent to which Chinese manufacturers have illegally dumped products in the U.S. market.