Solar Fight Sees Accusations Flying 中美太阳能纠纷引发口水大战

By newsdoug on October 24, 2011

Rhetoric heats up in illegal solar subsidy debate The last few days have seen an overwhelming flood of new chatter in the war of words between Chinese and Western solar cell makers, with China’s commerce ministry also voicing its views on this case that looks set to become a major battleground in the free trade debate. After US solar firms filed a formal anti-dumping complaint in the US last week against their Chinese rivals, China’s commerce ministry quickly and predictably fired back that the complaint was groundless, and warned that any punitive action could result in a damaging trade war that could hurt the global economy. (English article) At the same time, 3 top Chinese players, Suntech (NYSE: STP), Yingli (NYSE: YGE) and Trina (NYSE: TSL), all chimed in with various guarded statements saying it was too early to worry just yet. Meantime, the group leveling the accusations, led by the US arm of German solar cell maker SolarWorld (Frankfurt: SWV), replied to China’s tough talk with its own scathing statement accusing the Chinese of not only rampant illegal subsidies for its players, but also of allowing them to wreak havoc on the Chinese environment through irresponsible waste disposal practices. (official statement) I said last week that the speed of this conflict’s rapid evolution has surprised me, as China’s generous subsidies have been going on for years. Now I’ll add that the volume of the rhetoric is also surprising me, showing that both sides are taking this case very seriously and could take some equally strong actions if either doesn’t like the final ruling by the US International Trade Commission. The timing of this dispute is clearly very much in favor of the US solar companies, as no US politician, including the Obama administration, will want to look soft on China as the US economy continues to struggle just a year before the 2012 presidential elections. If Beijing is smart, it will quickly tone down its rhetoric and move discussions to back-room channels if it really wants to try to avoid punitive tariffs that now seem almost inevitable. Beijing’s actions in the next few weeks will be critical: a quieter, more conciliatory approach could result in less aggressive action by the US, which in turn would cause China’s solar companies to suffer less. But if China continues its loud rhetoric, this dispute could well turn into a drawn-out war that would seriously harm the long-term prospects of the Chinese players.

Bottom line: The outburst of accusations by China and US solar makers in their dispute over unfair trade could deal a long-term blow to Chinese solar makers unless Beijing moderates its rhetoric.

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