Trade body: US hinders climate fight, skews global solar market
TL/DR –
The China Photovoltaic Industry Association has criticized the US for distorting the global solar market through high tariffs on imported solar products and large subsidies for domestic companies. These policies, including the Inflation Reduction Act and the Infrastructure Investment and Jobs Act, were labeled as exclusive and discriminatory, violating multilateral trade rules and distorting the market operations of the global solar industry. Despite these US policies, Chinese solar industry remains strong due to its diverse global investments, robust supply chain, and rapid innovation, with Europe, Asia, and the Middle East representing key markets.
US Policies Distorting Global Solar Market: China Photovoltaic Industry Association
The China Photovoltaic Industry Association (CPIA) has recently voiced grave concerns over US policies it believes distort global solar markets. The association criticizes the United States for providing excessive subsidies to its domestic companies while imposing high tariffs on imported solar products, thus obstructing international cooperation in tackling climate change.
The CPIA reports that the US has erected significant protectionist barriers by imposing multiple trade restrictions and escalating tariff barriers on imported photovoltaic products. For instance, the import tax on Chinese solar cells was raised in May from 25 percent to 50 percent.
Furthermore, the US has implemented exclusive and discriminatory policies through legislation such as the Inflation Reduction Act (IRA) and the Infrastructure Investment and Jobs Act (IIJA), while subsidizing its own PV industry substantially. “The Inflation Reduction Act, introduced in 2022, provides unprecedented $369 billion subsidies to support investments in the clean energy sector, including domestic PV products…On May 16, 2024, the Department of Energy announced a $71 million investment to fund the Silicon Solar Manufacturing and Dual-Use Photovoltaics Incubator program and the Advancing US Thin-Film Solar Photovoltaics funding program,” stated the CPIA.
According to the association, these actions violate multilateral trade rules and dramatically distort the global supply chain market operations of the PV industry. Experts and industry leaders have also commented that while subsidies are quite common in the new energy sector worldwide, the US’s strategy of increasing external tariffs while financially supporting local firms is a clear double standard, aimed at thwarting Chinese solar companies from gaining global market share.
Chinese-made solar and wind power equipment have significantly aided the widespread adoption of affordable renewable energy globally, contributing to a global shift towards green development. International collaboration is crucial for shared gains in this sector.
Cui Fan, International Trade Professor at the University of International Business and Economics, explained that policy interventions are needed globally to rectify market flaws in advancing new energy. “However, in the WTO framework, subsidies must adhere to specific conditions, including avoiding unjust discrimination. The US” Inflation Reduction Act breaches this by favoring American products over Chinese imports,” he said.
Lin Boqiang, head of the China Institute for Studies in Energy Policy at Xiamen University, also shed light on the US’s larger new energy subsidies compared to China, despite consistently levying tariffs on Chinese goods under anti-subsidy pretexts.
Song Hao, assistant vice-president at GCL Technology Holdings Ltd, further emphasized the damaging effect of the US’s contradicting actions, particularly its restriction of imports while heavily supporting domestic solar industries.
Lin added that the Chinese solar industry, with its robust supply chain, efficient manufacturing, and rapid innovation, remains a global leader, despite US trade barriers. Chinese firms have diversified investments globally, strengthening ties with Europe, the Middle East, and other regions to seize new opportunities.
The US did not feature among the top ten markets of China’s solar module exports in the first half of this year, while Europe and Asia collectively accounted for over 80 percent of these exports. According to the CPIA, solar modules comprised 87 percent of China’s total PV product exports in terms of value.
The CPIA highlighted that the Middle East is becoming a pivotal destination for Chinese solar companies venturing overseas. Additionally, Africa has emerged as one of the fastest-growing regions for Chinese solar exports, with a 57 percent year-on-year increase in the previous year.
Learn more about this issue in this detailed report: Illegal Subsidies on U.S. Solar Industries Distort Global PV Market
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