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Govt aid needed for solar firms to weather tariff storm

By Lin Boqiang (Global Times)

08:26, October 09, 2012

Thanks to a series of trade disputes in major overseas markets, which are more than likely to soon culminate in a raft of punitive tariffs, a cataclysmic slowdown looms for the Chinese solar industry.

The US government is expected to soon wrap up its high-profile anti-dumping and countervailing case against Chinese solar panel producers. The US International Trade Commission (USITC), which just held a final hearing on October 3 over whether solar manufacturers in the country were injured materially by imports of Chinese solar products, will release its final ruling by November 7. The US Department of Commerce is also scheduled to announce a final determination on anti-dumping and countervailing tariffs on solar products from China the coming Wednesday after a preliminary decision in May, which set anti-dumping duties at up to 250 percent and countervailing duties at up to 5 percent. The final rates will take effect if the USITC finds fault with Chinese producers.

Meanwhile, the European Union (EU), China's biggest export market, also initiated an anti-dumping investigation of Chinese solar imports on September 6 before a group of European producers again filed a countervailing petition against China on September 25.

Such investigations may greatly harm China's solar industry due to the country's heavy reliance on the overseas market. Last year, China exported nearly 90 percent of its solar products, among which around 15 percent went to the US and nearly 60 percent flew into the EU. If Chinese products are deprived of price competitiveness due to trade conflicts, the country stands to lose mammoth shares in its major export markets.

Yet, it is inevitable for an industry to consolidate after years of rapid growth. When this happens, enterprises should learn from their previous mindless expansion and set a clear market positioning goal for the future.

At the same time, the government should work to ensure the industry can maintain a presence on the international stage. A helping hand is essential to protect the Chinese solar industry - an important part of the country's new energy sector - from suffering too much from trade protectionism in other countries and regions. What the government needs to do right now is to expand the domestic downstream market by adopting preferential policies and subsidies, which will increase the demand for solar products and thus offset losses in overseas markets.

Also, it should be pointed out that any official bailouts should target the industry as a whole instead of certain companies. Authorities or local government should not intervene to keep unfit companies running. The market should be left to decide which businesses are allowed to keep their doors open and which should be kicked out in the consolidation process.

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