Man Bites Dog? Chinese Solar Companies Accuse US of Dumping

Tit for tat. In the ongoing schoolyard shoving match between the US and China, it is evidently China's turn to push back.

Following a spate of accusations from the US that Chinese companies are 'dumping' solar panels for sale below cost in the US, China is now alleging the same.

One could smile indulgently and urge the two to play nicely together like the other, better behaved children in the sandbox, but there appears to be no respite in this test of wills. China senses its time has come and is testing the US wherever it can; commercially, militarily, diplomatically. The US does not like to be pushed. And who does? So it is expanding its efforts in the Pacific as well as challenging the Chinese on a range of issues from currency manipulation to IP theft as a reminder that it may be older, but still packs a mean punch when it wants to.

The reality is that the two nations need each other as markets, financing sources and coevolutionary stimulators of innovation, to say nothing of their potential as guarantors of world peace. However, like schoolmates, a certain amount of jostling is to be expected, possibly forever. JL

Carl Franzen reports in TPM:

Chinese solar panel manufacturers are taking a “tit for tat” approach in their growing trade dispute with the U.S. solar industry, and will ask the Chinese government to investigate whether U.S. solar companies are illegally selling polysilicon, the raw material used to make solar panels, at below cost in China, China Daily reported on Monday Gao Hongling, deputy secretary-general of the China Photovoltaic Industry Alliance, an industry trade group, told the newspaper that her agency is finalizing a formal complaint with the Chinese government against the U.S.

As China Daily reported:

“Foreign companies lowered polysilicon prices greatly in recent years and this has forced many Chinese polysilicon producers to go bankrupt,” [Gao] said…

Foreign countries, led by the United States, dumped 47,500 tons of polysilicon in China in 2010, 20,000 tons more than the previous year, according to statistics from the alliance. Ironically, the Chinese industry group claims that “US solar companies are receiving large subsidies from the US government,” when China’s solar industry reportedly received $30 billion in low-cost loans in 2010 alone, according to the Guardian, compared to the $1.1 billion that the entire U.S. solar industry received from the government in that same year, according to the U.S. Energy Information Administration.

Chinese solar companies have also claimed that they pay higher interest on government loans than do their U.S. competitors, 6 to 7 percent for at least one company compared to the 5 percent interest that Solyndra was charged before declaring bankruptcy.

Still, it worth noting that Chinese solar companies’ claims aren’t entirely smoke and mirrors: The U.S. did post a positive trade balance with China last year, according to GTM Research, though that was presumably due to legal trade.

The news of the Chinese industry group’s call follows the announcement on November 9 that the U.S. Chamber of Commerce is investigating the claims of SolarWorld America and six other American solar companies that China is the one illegally dumping its artificially-low priced solar panels into the U.S. market.

The Chamber of Commerce is mulling anti-dumping tariffs of 50 percent to 250 percent on Chinese solar panels (based on SolarWorld’s claims that the prices of Chinese panels are 50 to 250 percent artificially low) and an anti-subsidy tariff of 100 percent, upon which it will rule in March and May, respectively, the New York Times reported Monday.

SolarWorld, a Germany company with an American subsidiary, is also preparing to launch a similar claim against China in the European Union.

After some initial bluster and flat-out denials of any illegal trading practices, the Chinese government has conceded internally that it is likely to be slapped with those tariffs, according to The Times, based on rules that protect U.S. manufacturers, which China agreed to when it joined the World Trade Organization in 2001.

But this new domestic investigation into U.S. polysilicon could be a way for the country’s solar industry to strike back. As for what effect that would have on the U.S. solar industry, GTM Research’s Eric Wesoff theorized: “The U.S. has a positive trade balance with China, mostly from its shipments of polysilicon. A tariff on polysilicon would change that.”

Globally, the solar industry is facing a shakeout due to the plummeting price of polysilicon, which has fallen as much as 48 percent this year alone.

A GTM Research analyst recently told TPM that a “dangerous time” was ahead for the U.S. solar industry, specifically two of the three American manufacturers of polysilicon, REC Technology US Inc. and MEMC Electronic Materials. China accuses REC and another American polysilicon manufacturer, Hemlock, of receiving a combined $324 million in subsidies.

Hemlock received $169 million in tax credits in 2010 from the stimulus program, Bloomberg reported. REC acknowledged $155 million in tax credits.

China imported a record 49,000 tons of polysilicon during the first three quarters of 2011, according to the Chinese customs agency.