More Solar Outrage Over EU Probe 欧盟光伏倾销调查触发众怒
The headlines are filled this morning with chatter on the latest news that the European Union is launching an anti-dumping probe into Chinese solar panel makers, following a similar investigation by the US that is likely to result in punitive tariffs by the end of this year. In addition to news of the probe itself, most of the major Chinese panel makers have issued their own statements protesting the move, and Beijing has also expressed regret over the decision. Rather than always turning to these predictable displays of outrage and disappointment each time they receive a setback in this year-long dispute, the Chinese players might consider trying a more conciliatory approach if they really want to avoid a trade war over an industry that everyone agrees will be critical to the development of long-term sustainable energy sources.
In a widely expected development, the EU on Thursday announced it was launching a probe into allegations that Beijing unfairly supports Chinese solar panel makers through policies like low-interest loans and export rebates. (English article) That probe follows a similar US investigation that resulted in a recommendation that punitive tariffs be levied against Chinese panel makers in May. (previous post)
The response from China to the new EU probe has been quite predictable, mostly because we’ve heard similar howls of protest at each development in this long and increasingly tortured process that has cast a spotlight on the differing approaches to government support for emerging sectors in China and the West.
Beijing responded by saying it deeply regrets the EU decision, adding that any punitive action will only hurt everyone. Suntech (NYSE: STP), Yingli (NYSE: YGE) and Trina (NYSE: TSL), 3 of the top industry players, all responded with their own statements of protest, again emphasizing the message that the allegations are unfounded and any punitive measures will only hurt the entire industry.
Rather than always make these same protests of their innocence, I’d like to suggest that both Beijing and the Chinese solar companies try a more conciliatory approach to resolve the dispute before it spirals out of control and really does hurt the industry, which is already suffering from a massive supply glut. It’s not often that both the US and Europe launch such similar investigations against a specific industry, which should tell Beijing that perhaps many of the complaints are really valid.
Accordingly, government leaders in Beijing should sit down with the solar companies and the local governments that are their biggest supporters and try to work out a comprehensive plan to wean the industry from state support. They can then take that plan to the US and EU, and use it to show their sincere desire to diffuse this issue.
In the meantime, market forces could soon help to diffuse the dispute as well by forcing many of the Chinese players to de-list their stocks as they slowly sink into insolvency. Suntech and JA Solar (Nasdaq: JASO) have both seen their shares trade below the $1 mark for around a week now, and 30 days below the $1 level would trigger a de-listing notification. LDK (NYSE: LDK) and Renesola (NYSE: SOL) are also trading near the $1 mark, and could easily slip below that level in the next month or 2. A coordinated plan from Beijing to resolve this trade dispute could spark a rally in these companies’ shares, helping to not only revive their stocks but also their longer term business prospects.
Bottom line: Beijing and China’s solar panel makers need to develop a comprehensive plan on weaning the sector from unfair state support to avoid trade wars with both the US and EU.
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