Trade war with China over solar panels

Cold_Collation

LE
Book Reviewer
#1
Mixed feelings over this. We should use more solar and cost has historically been a barrier. Wind farms and other green policies ain't gonna cut it and our energy policy in this country is a shambles.

On the one hand, who cares if the Chinese products are subsidised, so long as we have a cheap source of them. On the other, is it a classic loss-leader situation where they're looking to put everyone else out of business?

Opinions?

Europe on verge of trade war with China over cheap solar panels - Telegraph
 
#2
It does appear to be a Chinese trick, copied from everybody else. Undercut everybody till all their businesses go bust and then start to creep prices up. They did the same trick with the Rare Earth Mineral mines, added to which they threw trade restrictions as the Chinesse claimed they needed the rare earth for their own use.

That sort of back fired as it pissed off a lot of people who decided that the Good Ole US of A needed it's own sources and started reopening the mines that had closed when the Chinese kept dropping prices..... The Japanese are working hard at Sea mining and may have made a breakthrough

The Pacific Dream: An Underwater Rare Earth Behemoth | Rare Earth Investing News
 
#3
It does seem somewhat hypocritical for the EC to use subsidisation as a reason while the CAP gravytrain trundles along quite happily.
 
#4
Thing is, like so many policy overspills, it's aimed internally and not abroad at all.

The polluting effects of coal (mining and burning) are a serious problem in China and while they need ever-increasing energy supply they also need to cut back on emissions from their power plants.

Nuclear is one option they're pursuing but anywhere there's a realistic renewable option they're going all out for that - it's entirely possible to drive through southern Gansu without seeing a single home that doesn't have it's own solar panel (and a watermill or zhaoqi methane facility depending on circumstances).

To make these panels affordable for peasant farmers, the manufacturers have had to bring the unit cost right down which they can only really do through massive production runs, the excess of which need to be sold somewhere. Ironically, the only alternative would be increased government subsidy which is the very substance of the EU complaint.

The same grassroots environmental complaints which are driving diversified energy production were also a factor in restricting rare earth exports. It's never been a secret that there were larger deposits elsewhere, it's just that for some countries it wasn't economic to mine theirs while the Chinese operations were keeping the price down; while others were simply unwilling to shit on their own doorstep to fund their addiction to electronics. Once the Chinese cut their export quotas, quite a few of the other countries suddenly found themselves with a profitable mining industry while PRC was able to cut pollution and bodyswerve accusations of monopolisation.

Apart from on here, obviously.
 

Cold_Collation

LE
Book Reviewer
#5
S_a_C, that's quite a heartening post. It's interesting that many people point at the US and its wastefulness and then preach about being greener/energy security, and yet when the Chinese do something like this there's an assumption of darker, rather than pragmatic, reasons.
 

Grumblegrunt

LE
Book Reviewer
#6
china is having to subsidise them or they will collapse - they spent a billion building huge factories then the orders switched off in 08. prices have been plummeting since. there are worries that the 30 year boom is coming to a close and china has to cut it off internally to make it manageable before the markets induce a collapse.

plus technology is coming close to rendering the old panels useless as they can now make panels using a printers and special inks.
 
#7
and yet when the Chinese do something like this there's an assumption of darker, rather than pragmatic, reasons.
Yes, it's rather tiresome isn't it? Almost as if people are deliberately looking for an excuse for their preconceived position rather than 'seeking truth from facts'.

I recently read an interesting critique of US anti-dumping policy and how free trade regulations are used to restrict market competition safe in the knowledge that Chinese suppliers lack the funds or know-how to defend themselves in US courts. I'll post a link when I get home.
 
#8
I'm just waiting for the time when a lot of panels will be at end of life and need disposing of.

Considering these panels are exempt from the EU dangerous substances regulations. Some body will have to foot the bill for disposal.
 
#9
china is having to subsidise them or they will collapse - they spent a billion building huge factories then the orders switched off in 08. prices have been plummeting since. there are worries that the 30 year boom is coming to a close and china has to cut it off internally to make it manageable before the markets induce a collapse.

plus technology is coming close to rendering the old panels useless as they can now make panels using a printers and special inks.
The subsidies were there to promote production so that costs could be kept within the means of property owners. It's a strange facet of Chinese economic planning that provinces set their own targets for both production and consumption - only a few areas went for grants to homeowners rather than shaping the market and then mostly in ethnic minority areas.

They weren't worried about the panels not being the latest technology and so R&D wasn't a priority. Getting people off coal or even electrified for the first time ever was the ultimate goal and good enough was good enough.
 
#10
China subsidized solar to grab global market share in a green industry. In order to fuel future growth of Chinese economy at the expense of the rest of the world.

It comical to imply these subsidies were meant to support production for the local Chinese market.

Chinese solar was a mercantilist policy that went out of control because of over investment in the Chinese solar industry.

EU has the choice of letting EU solar industry die are following US lead in stopping Chinese from flooding its market with under priced solar panels.

In the end protecting your local solar industry and just waiting for Chinese solar industry to implode from debt is the best course.
 
#11
Mixed feelings over this. We should use more solar and cost has historically been a barrier. Wind farms and other green policies ain't gonna cut it and our energy policy in this country is a shambles.

On the one hand, who cares if the Chinese products are subsidised, so long as we have a cheap source of them. On the other, is it a classic loss-leader situation where they're looking to put everyone else out of business?

Opinions?

Europe on verge of trade war with China over cheap solar panels - Telegraph

It's impacting german solar manufacturers and therefore is a European wide problem. We'll now see the the EU is designed to deal with German issues in the main.

If the Chinese have been dumping onto the market then why isn't the WTO dealing with it.
 
#12
I'm just waiting for the time when a lot of panels will be at end of life and need disposing of.

Considering these panels are exempt from the EU dangerous substances regulations. Some body will have to foot the bill for disposal.

We'll be footing the bill.
 
#13
I am always very suss about anything the Chinese do. I have no confidence in that society to do anything that will benefit mankind or the planet in general.
 
#14
It comical to imply these subsidies were meant to support production for the local Chinese market.
Looking at where the bulk of production actually went makes it look less comical. Yes, there was a mercantile aspect to how they disposed of the excess but that was secondary to their main reason.

It's inconsistent that if they'd been intending to steal a march in market share and were capable of carrying out a conspiracy on such a grand scale, they'd suddenly lack the foresight or ability to keep that up when it came to technological progress.

Sometimes, a cigar is just a cigar.
 
#15
I am always very suss about anything the Chinese do. I have no confidence in that society to do anything that will benefit mankind or the planet in general.
Even if you were right, they wouldn't be unique in that respect. Doing the same as any other country only bigger doth not 'evil' make.
 
#16
If the Chinese have been dumping onto the market then why isn't the WTO dealing with it.
The WTO has a higher burden of proof threshold and isn't as politically accommodating. For example, it won't accept the complainant's analysis as the indisputable truth.
 
#17
Thing is, like so many policy overspills, it's aimed internally and not abroad at all.

The polluting effects of coal (mining and burning) are a serious problem in China and while they need ever-increasing energy supply they also need to cut back on emissions from their power plants.

Nuclear is one option they're pursuing but anywhere there's a realistic renewable option they're going all out for that - it's entirely possible to drive through southern Gansu without seeing a single home that doesn't have it's own solar panel (and a watermill or zhaoqi methane facility depending on circumstances).

To make these panels affordable for peasant farmers, the manufacturers have had to bring the unit cost right down which they can only really do through massive production runs, the excess of which need to be sold somewhere. Ironically, the only alternative would be increased government subsidy which is the very substance of the EU complaint.

The same grassroots environmental complaints which are driving diversified energy production were also a factor in restricting rare earth exports. It's never been a secret that there were larger deposits elsewhere, it's just that for some countries it wasn't economic to mine theirs while the Chinese operations were keeping the price down; while others were simply unwilling to shit on their own doorstep to fund their addiction to electronics. Once the Chinese cut their export quotas, quite a few of the other countries suddenly found themselves with a profitable mining industry while PRC was able to cut pollution and bodyswerve accusations of monopolisation.

Apart from on here, obviously.
This is supply and demand with the caveat of the ability to buy... China is manipulating the market to improve its own internal standing. At the same time it is destroying external manufacturing ability and thereby dominating the market which it will, historically, seek to exploit.

Sorry. I would say, the Chinese soak up the fumes and take issue with their leaders who would seem to lead a gilded life - did not the new PM through the Press Office say he had never taken a taxi?

Rare Earth metals are another point of disagreement - the Chinese are seeking to subsume any mining operation that extracts these minerals - and then exploit the price. Is it true that one way or the other China needs an 8% GDP growth rate? Otherwise the whole edifice goes tits up?

SAC - enjoy the posts from you which try to balance, but with China under Communism, I can only but reject.
 
#18
This is supply and demand with the caveat of the ability to buy
Well, yes. And they created the ability to buy amongst their poor by using market forces to drive the price down within their means. The side-effect of that was a glut of products which had to be disposed of and the overspill of which was sold abroad.

China is manipulating the market to improve its own internal standing.
Not in the way you’re trying to present. That’s a conspiracy theory too far and global markets are far too complex to be controlled by one government ruling only a fraction of it.

At the same time it is destroying external manufacturing ability and thereby dominating the market which it will, historically, seek to exploit.
Yet strangely, solar panel manufacturing, rare earth production, garment manufacturing et al. still exist elsewhere. The market moves on. They understand that, as only outsiders can.

did not the new PM through the Press Office say he had never taken a taxi?
They denied a recent report in a Hong Kong newspaper that he’d recently taken a taxi to the Diaoyutai Hotel in Beijing and tipped the driver. The report was ostensibly gleaned from the driver, one Guo Lixin, and picked up by Xinhua who were later forced into an embarrassing climbdown (a summary at SCMP). They did not say he’d never taken one. Given his early beginnings – shared by the majority of the current leadership – it’s not like he’s never eaten bitterness. He has far more first-hand experience of how shitty life is for the lower orders than our professional politicians do.

Rare Earth metals are another point of disagreement - the Chinese are seeking to subsume any mining operation that extracts these minerals - and then exploit the price.
Cutting back supplies in the knowledge that there are other suppliers and demand isn’t going away anytime soon furthers that agenda how, exactly? Their economic plans are based on moving up the value-added chain and increasing domestic consumption, neither of which can be achieved without wholesale upgrading of their technology levels – that’s where the rare earths, raw materials and parts thereof are going. The rest of the world hasn’t and never was going to stop buying the basics for electronic manufacturing just because their familiar sources dried up – supply and demand just doesn’t work that way.

Is it true that one way or the other China needs an 8% GDP growth rate? Otherwise the whole edifice goes tits up?
Some people believe it is in order to keep creating jobs in the same old way. The Party’s view seems to be that growth needs to slow in order for them to carry out the restructuring of their economy – Li Keqiang recently stated that the government’s aim was to keep growth below 7.5% to avoid upsetting the reforms. One factor of the one-child policy is that fewer jobs need to be created and people can keep working beyond the mandated retirement age (currently 60 for men and 50 for women or 55 for female state workers). That gives them some wiggle room both in what they need to spend on old-age pensions and in how many jobs they need to keep their people in work. Hukou reform is another key tool in managing the urban labour pool.

SAC - enjoy the posts from you which try to balance, but with China under Communism, I can only but reject.
Given your LOCSTAT that’s understandable but it’s a mistake to assume that the CPC is just the CPSU with chopsticks. They were always very, very different beasts drawn from very different societies and circumstances. The Soviets tried to turn it into a Mini-Me and right up to the Sino-Soviet split were disgusted at the Chinese insistence on promoting for education and ability rather than revolutionary credentials. Mao himself tried to turn it into a vehicle for his own vision of the world and failed miserably – because ultimately his Party was drawn from a grassroots far more conservative than his dream could accommodate.

Today, it could be described as: Fascist except for the lack of a central leadership figure; state-corporatist except for the extent to which it nurtures and co-opts private enterprise; socialist except for the pick-and-choose way it intervenes in markets; authoritarian certainly, with the codicil that it reserves the right to insert itself into whatever facet of society it chooses rather than actively doing so. It’s flexible, adaptable, endlessly self-renewing and fascinating in the same way that a forest fire is - lots of colour and excitement and with the chance of being roasted if you aren't careful. The people in charge now draw their inspiration more from Sun Yat-Sen than Mao and are ideologically closer to the Kuomintang than to the Great Helmsman.

As to whether it’s currently a Communist party in anything more than name, I’ll quote Chen Yuan’s famous retort to the late Tom Robinson’s needling on just that subject: “Listen, Mr Robinson. We are the Communist Party and we will define what Communism is.”
 
#19
Who cares about market share, isn't more important for all of us that billions of Chinese get their energy from sustainable sources without tipping the planet into environmental melt down? Anything that increases supply and reduces cost for their home market is more important than boxhead profit margins.
 

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