The “Blame China” Game

Rumors are swirling about the next shoe to drop in the campaign against renewable energy. A handful of struggling solar manufacturers are expected to announce they are joining a petition to the International Trade Commission and the US Department of Commerce (DOC). The petition is expected to allege China unfairly subsidizes solar manufacturers and is ‘dumping’ solar modules on the global market below cost (a view exacerbated by a few high profile solar company bankruptcies I previously wrote about).

A successful petition would be the first step towards imposing tariffs on solar panels imported from China. The announcement is timed to coincide with the start of Solar Power International, the US’s largest solar trade fair taking place next week in Dallas.

Let’s state plainly what’s going on here. A group of manufacturers who can’t compete with today’s solar panel prices are seeking to erect trade barriers to make the US a ‘safe market’ for their own more expensive solar panels. They want to prevent Americans from getting access to low-cost solar panels and low-cost solar electricity so they can sell their own more costly product to them instead.

This is clearly a tactic in the narrow self-interest of the manufacturers joining the petition. It’s not in the interest of American consumers. It’s not in the interest of ratepayers. It’s not in the interest of our national security. And it’s certainly not in the interest of slowing global climate change.

I’ve said it many times, but it’s worth saying again. The best thing we can do is encourage the solar industry to ruthlessly drive down the cost of solar panels. And that’s exactly what the industry has been doing with manufacturing in the US, Europe, China, Malaysia, the Philippines, and beyond. As a result, since 2008 the cost of solar panels has come down by roughly 75% with most of that coming from reductions in silicon commodity costs and manufacturing improvements.

The less solar power costs, the more favorably it compares to conventional power, and the more attractive it becomes to utilities and energy users around the globe. Today’s low cost solar panels are overturning antiquated notions about the limits of solar power and driving a massive wave of new demand for clean solar-generated electricity.

As with other high tech fields, rapid innovation and cost reduction in solar poses a challenge for those who can’t keep up. While individual company failures may be painful, it’s in the best interest of consumers for the market to remain competitive. Propping up failing companies with trade barriers would create an unhealthy market environment and ultimately discourage innovation by rewarding the laggards.

Leaving all that aside, here’s where the ‘blame China’ argument really starts to lose credibility from my perspective. First, according to the US Solar Energy Industries Association (SEIA), the US solar industry in 2010 had positive trade flow of $1.9B and was a net exporter to China by more than $240M. In other words, last year US companies sold more solar equipment to China than Chinese companies sold in the US. Solar is a global industry with a global supply chain and if one piece of that chain is impacted, everyone will be ultimately be affected.

In addition, the domestic solar industry is thriving and initiating a trade war would only be shooting ourselves in the foot at a time when we’re already facing a recession. Currently the US solar industry employs 100,000 people in the US (more than coal mining industry) and that growth isn’t in manufacturing, which accounts for less than 25% of the industry’s jobs, but in the diverse ecosystem of solar suppliers and others who sell, install, engineer and construct solar arrays and power plants.

Second, you don’t have to be much of a stock analyst to recognize that Chinese manufacturers are struggling to keep up with today’s competitive market as much as US companies are. If the companies joining the potential trade petition allege that Chinese companies benefit from unfair advantage, you’d expect to see Chinese companies earning comfortable profits while everyone else suffered. That’s just not the case. In fact, I’d argue that the signs indicate we’re likely to see some big Chinese failures in the upcoming years as the competitive marketplace exacts its toll.

My hope is that this all adds up to nothing and US trade representatives recognize that starting a trade war over solar panels would be stupid. Trade barriers would only raise the cost of solar equipment and solar power–something that is only in the interest of a small group of manufacturers who can’t keep up in today’s market. Instead we should continue to focus on growing demand and facilitating the growth of a promising and exciting new era of low cost, ubiquitous solar power.


  1. Couldy Wang
    Yanqing of Beijing in China
    February 1, 2012, 6:42 am

    First of all, please forgive my English level, so that I can only rely on network translation to read this article and write a review, so many places I don’t quite understand. About “accused China of” this aspect, I agree with your point of view. To a Chinese point of view, I hate us officials had done. But to a politician’s eyes (I’m not politicians) to see, the United States the position of the government is understandable. But again from the world new energy future development perspective, the United States government are doing to the world new energy future development has some limitations. Whether the solar energy or hydrogen, they cost a bit of a slightly tall, I think the development and utilization of the moon soil of the helium-3 will solve the energy crisis is human potential one way. Helium-3 is a clean, safe and high efficiency of the nuclear fusion power generation materials,. Helium-3 can and hydrogen isotopes happen fusion reaction, but with general of the fusion reaction is different, helium-3 in the fusion process does not produce neutrons, so radioactive small, and the reaction process is easy to control, being green and safe, but the earth-a total of three helium reserves no more than several hundred kilos, to meet the needs of the human. The scientists found that, although the earth helium-3 reserves is very little, but on the moon, its reserves is very considerable. Helium is mostly in the particles less than 50 microns in the month of titanium iron ore in soil. Estimate the entire moon can offer 715000 tons of helium-3. These helium-3 can produces electrical energy, which is equivalent to 1985 of the capacity in the United States in 40000 times, considering the month of soil mining, exhaust, isotope separation and shipped back to earth’s cost, helium-3 energy pay less than the estimates of up to 250. The pay and uranium 235 production than nuclear fuel (pay than about 20) and the earth coal mining (pay less than 16 than compared is very favorable. In addition, from the extraction of soil on a ton of helium-3, but also can get about 6300 tons of hydrogen, 70 tons of nitrogen and 1600 tons of carbon. To maintain these byproducts permanent base the moon, it also is necessary. Russian scientists think California merv, human just launch a year 2 to 3 ship load 100 tons of the spacecraft, from the moon on the helium-3 to all mankind can for as alternative energy use 1 year, and its transportation cost, only the equivalent of current nuclear power a few points. According to Gary merv introduces, at present if humans began implementation of the moon helium-3 of mining plan, about 30 to 40 years, humans will realize the moon helium-3 field of the mining and back to the ground, the total project cost will be like in between $250 billion and $300 billion.
    Hope in the future of the helium-3 energy, can be in the range of large-scale use on earth. Let the planet’s future is clean, green.

  2. Amir Dewani
    October 19, 2011, 10:29 am

    I read this article with great interest. While I agree with you, the truth has to be told and that is: Our policy makers, our ‘Nobelist’ economists and those who mean business in America have failed us not only in evolving strong policy to face “The Great Energy Challenge’, but have been persistently keeping us miles away from defining the viable economic policy as a whole.
    All these past 30 years or so our mindset has continued to be that we are the most matured economy of the world, that we are the biggest democracy in the world , that our dollar currency is the world- reserve currency, that our educational institutions are the best in the world and that there is no need for us to worry about being ‘competitive’ in manufacturing, trading and commerce. What to talk about unemployment of 9.1%, the precarious health and education scenario and more.Our Harvard University has conceded the first position to Cambridge (Ref:US News and World Report today).
    We have been led to think that we have already scaled the heights of mount Everest , while forgetting the fact that even mountaineers plan their strategy to scale back to come back home safe instead of getting frozen at the top.
    How can you play The ‘Blame China’ Game’ on the failed economic policy of doing export business based on mergers, acquisitions and monopolies at home at the instance of the rich lobby while ignoring the changing trends? And, as a result, much against my will to say, we are now the biggest importers of the world and the biggest debt-ridden economy of the world and that we are no more enjoying the prestigious “AAA” status any more.
    I stand to be corrected if wrong to say that we have been made completely ignorant of the meaning and implication of the word ‘competitiveness’.
    All the troubles in our housing. banking, business, international, tourism, energy and different sectors of the economy are deeply rooted in ‘complacency’.
    To be proud of past achievements is good, but the turning tides around you can’t be overlooked any more.
    However, these are my personal views based on what I read and try to understand. Yet like any other citizen I wish to see the greener days ahead and the shining sun for our future generation.