Following Washington’s recent decision on an anti-dumping and anti-subsidy probe into Chinese solar products, the US and China are preparing for another round in their long-festering trade war. While the outcome is uncertain, Chinese players are however not sitting still and preparing to take a hit.
The US International Trade Commission (USITC) announced earlier this month that it will formally investigate and decide whether to impose higher duties on Chinese solar products, including those made with parts from Taiwan.
Unlike the previous investigation, Taiwanese makers are also included this time. That suggests that Washington is keen to plug the loophole that enables Chinese companies to evade tariffs by making their panels with solar cells manufactured in Taiwan.
In 2011, the US had decided to levy anti-dumping tariffs as high as 249.96 percent on Chinese solar cell makers. That led to China’s solar product experts tumbling 30-40 percent in the following year.
But now, no matter what the outcome of the latest investigation would be, the damage to the industry would not be as serious as the case earlier, Chen Zhe, an energy sector analyst at Anbound Consulting told the National Business Daily.
It is because US trade barriers had pushed Chinese solar firms to actively seek new markets in Japan, Canada and emerging economies like India and ASEAN nations. Exports to these countries have surged, helping the industry recover almost all the ground lost in the US market, Chen noted.
Meanwhile, on the home turf, solar products makers are benefiting from increasing demand amid policy blessings from Beijing. Domestic demand for solar energy products has been soaring, and the trend is set to continue.
China installed a record 12 gigawatts of solar power capacity in 2013, doubling its rate of solar installations, according to figures compiled by Bloomberg New Energy Finance. This year, the installation target is 14 gigawatts.
No country has ever added more than 8GW of solar power in one year as China has done, according to Greenpeace East Asia. That gives an idea of how fast the Chinese market is growing
If the US decides to tighten the anti-dumping and anti-subsidy regime in March and June respectively, all crystalline silicon photovoltaic products made in China and Taiwan will be subjected to higher tariffs.
To prepare for the worst, some Chinese manufacturers have already established factories overseas to evade the tariffs. Such trend may intensify if the trade conditions turn adverse. At the same time, Chinese makers are also lobbying with Beijing to take retaliation action against the US.
In fact, Chinese manufacturers are not the only ones that have been exploiting a loophole to evade tariffs; their US counterparts have been doing the same. As of last November, of the polysilicon that China imported, the US actually took up 42 percent, with most of it going there via processing trade, according to China Electronics News.
That’s why Washington’s latest move has irritated Chinese industry players, prompting them to seek counter-action. They are now lobbying the Chinese commerce ministry to ban polysilicon from processing trade, China Electronics News noted.
The tactics seem to working. A major American industry group — the Solar Energy Industries Association (SEIA) — has called for a discussion between the key parties, hoping that an agreement could be reached that will end all the current trade disputes related to the solar panel industry.
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