height=”480″ align=”right” width=”360″> I’ve been trying to avoid
writing about the latest punitive tariffs for Chinese solar panels
that look set to come from the European Union this week, since the
story has dragged on for more than a year now and the outcome was
almost inevitable. But that said, it would be a bit remiss of me not
to write at least something on this latest move, which is expected
to see European Trade Commissioner Karel De Gucht formally recommend
the introduction of anti-dumping tariffs for solar panels supplied
from China. ( href=”http://usa.chinadaily.com.cn/business/2013-05/08/content_16483547.htm”>English
article) The latest reports say the recommended levies are
likely to be set at 40 percent or higher, even though industry
insiders say anything above 30 percent could seriously hurt China’s
already struggling solar panel sector. [Ed. Note: Recommended
Tariffs were release on Thursday, averaging 47.6% in a range from
37.3% to 67.9%. href="http://www.altenergystocks.com/archives/2013/05/european_commission_recommends_tariffs_on_chinese_solar.html">
More here.] But instead of focusing on this tired
old story, I’d like to move my attention to China’s predictable
reaction, which was to lash out with a warning to the EU on the
risks of levying such tariffs.
Personally speaking, I do believe that China regularly engages in
the kinds of unfair support for its solar sector that prompted the
initial US and EU investigations. That’s just the way that Beijing
does things: it picks industries it wants to promote, especially in
emerging high-tech areas, and then showers them with all kinds of
benefits like tax rebates, free or cheap land and other forms of
But instead of acknowledging this problem, which gives Chinese firms
an unfair advantage over companies in other markets, China simply
continues to do nothing to address the source of the complaints.
Instead, its approach is always reactionary, whereby it sits back
and watches momentum slowly build against its solar panel makers,
and then reacts angrily at each negative development.
China certainly can’t say it didn’t see this coming, as this clash
has been building for nearly 2 years now. It all began with the
bankruptcy of a US solar panel maker in 2011, which led to a
congressional hearing because the failed company had received a
government-backed loan. That hearing resulted in the launch of a
formal investigation, which ended with the decision to levy punitive
tariffs last summer, and the finalization of those tariffs in
November. ( href=”http://www.youngchinabiz.com/en/us-finalizes-china-solar-tariffs/”>previous
In the meantime, the EU launched its own investigation since many
European solar panel makers also struggled for similar reasons. Like
the US case, the EU process has been long and involved a number of
major milestones, the latest of which will be the recommendation to
impose tariffs this week. That move will be followed by a few more
administrative steps, before such tariffs are most likely finalized
later this year.
In the face of this tired and ultimately destructive cycle, leaders
in Beijing should seriously reconsider their approach, taking a more
constructive and proactive tack. This kind of angry and reactive
approach is actually quite typical for Beijing in many areas, from
trade disputes to diplomacy and domestic social issues.
Chinese leaders typical abhor the idea of any kind of “interference”
in such issues, and usually just prefer to let matters build to a
crisis level before taking any action. The only problem is that
usually by that time, the problem has become so great that it’s
difficult to solve. What’s more, frustration and anger from all
parties make constructive dialogue difficult or impossible, which
ultimately results in this kind of destructive deadlock.
At this point in the solar panel dispute, it’s probably already too
late for Beijing to take any constructive steps to try and address
concerns in the US and Europe. But that doesn’t mean that China
shouldn’t at least try to make at least some kind of conciliatory
effort, which could perhaps help to end this dispute sooner rather
than later. That’s important, since it’s in everyone’s interest to
salvage this key sector that will be critical to creating a
sustainable energy environment in the future.
Bottom line: Beijing needs to change its approach to one
of constructive dialogue rather than angry warnings to solve its
solar panel disputes with the US and EU.
Doug Young has lived and worked in China for 15 years, much of
that as a journalist for Reuters writing about Chinese companies.
He currently lives in Shanghai where he teaches financial
journalism at Fudan University. He writes daily on his blog, href=”http://www.youngchinabiz.com” >Young´s
China Business Blog, commenting on the latest
developments at Chinese companies listed in the US, China and Hong
Kong. He is also author of a new book about the media in China, href=”http://www.amazon.com/gp/product/0470828536/ref=as_li_ss_tl?ie=UTF8&camp=1789&creative=390957&creativeASIN=0470828536&linkCode=as2&tag=wwwtomkoom-20″>The
Line: How The Media Dictates Public Opinion in Modern China.
Photo: Angry sculpture in href=”http://en.wikipedia.org/wiki/Maijishan_Grottoes”>Majishan
Grottoes in Gansu Province, northwest China. Photo by
via Wikipedia Commons.