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Bloomberg New Energy Finance chinawto

Published on September 26th, 2012 | by Andrew

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China Solar Inc. Trade Battles Intensify; State Bank to Boost Financial Support for Largest Players

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September 26th, 2012 by  

 
News regarding international trade in the fast-growing, hotly contested markets for solar photovoltaic (PV) cells and panels is coming in hot and heavy this week as the number of international trade and domestic legal actions filed against the Chinese government, solar PV manufacturers, and PV exports continues to mount.

In Europe, the EU ProSun group of solar PV manufacturers Sept. 25 added to a WTO anti-dumping petition that the European Commission (EC) announced it would investigate on Sept. 6. The second EU ProSun petition asserts that the Chinese government is specifically and directly subsidizing PV manufacturers’ exports in such a way as constitutes a “predatory” practice prohibited by WTO rules.

Adding further to China’s growing WTO solar power caseload, news reports say that Indian PV manufacturers are lobbying their Commerce Ministry to launch its own investigation into Chinese dumping of PV cells and panels and solar PV subsidies proscribed by WTO rules.

In the US, Oregon Democratic Senators Ron Wyden and Jeff Merkley on Sept. 24 introduced two bills that would prohibit the US federal government and taxpayer-funded programs from purchasing Chinese PV panels. The Investment Tax Credit Integrity Act (S.3610) proposed prohibiting granting of the solar investment tax credit (ITC) to project developers intending to purchase Chinese PV panels.

The Buy Fairly Trade Goods Act of 2012 (S.3611) would prevent government offices and agencies from buying “unfairly traded products that are subject to trade remedy tariffs.” In addition, it would prohibit the federal government from contracting to buy solar or wind-generated electrical power from suppliers that use PV panels or wind turbines manufactured by companies in countries subject to unfair trade tariffs or duties.
 

 

China State Bank “Doubling Down” to Save Nation’s Largest PV Players

All this comes as the China’s Securities Journal, an official state publication, released a report saying that the state-owned China Development Bank is recommending to strengthen financial support for 12 Chinese solar power companies (including Suntech Power Holdings, Trina Solar, and Yingli Solar; three of the largest PV manufacturers in the world).

“This is important to the industry that only 12 selected companies can receive state support, indicating the government’s intention to speed up industry consolidation,” commented Bloomberg New Energy Finance analyst Jessica Ng in Beijing. “It seems like Suntech, Trina, and Yingli will survive from this with, while LDK may be struggling to get on the list,” Bloomberg News reported.

Notably absent from those mentioned is LDK Solar, said by anlaysts to be the weakest of China’s largest PV manufacturers. LDK’s latest financial results show “a company teetering on the brink of collapse,” according to one news report. LDK is said to have hired investment bank Morgan Stanley to help find a buyer for LDK, which is a Chinese state-owned company.

Having ramped up production capacity and exports tremendously in recent years, China’s PV manufacturers continue to struggle to clear a mountain of inventory, selling prices that leave no or little margin for profit and increasingly burdensome debt loads.

The EU economy, China PV manufacturers’ largest export market, is sputtering as it suffers under the burden of sovereign debt issued to prop up ailing banks and property markets. ProSun’s decision to add an illegal subsidy petition to its previously filed petition claiming dumping of PV cells, wafers, and panels adds significantly to China’s solar industry woes. The European Commission WTO legal investigation finding in favor of ProSun’s illegal subside petition could result in the imposition of countervailing duties on Chinese imports.

Teetering on the Brink of Collapse?

US WTO authorities — the Commerce Dept. and International Trade Commission (ITC) — have already preliminarily found in favor of similar illegal trade petitions against the Chinese government and solar PV manufacturers. Countervailing duties are now being imposed on Chinese PV imports to the US based on 12 categories of Chinese subsidies. Preliminary import duties to counter Chinese dumping are also being levied in advance of final rulings on both petitions; expected to come from the Commerce Dept. in mid-October.

Representing “the majority of EU solar industrial production,” EU ProSun and “the Sustainable Energy Initiative for Europe” group president Milan Nitzchke stated: “Chinese government subsidies are only available to Chinese companies. Massive subsidies and state intervention have stimulated overcapacity more than 20 times total Chinese consumption and close to double total global demand.

“Hence, more than 90% of Chinese production had to be exported. Irrational overproduction on this scale cannot generate profits. Chinese subsidies shield manufacturers from insolvency, and are pumped into solar companies even if they are unprofitable. Most Chinese solar companies would have gone bankrupt a long time ago if not for endless government subsidies. Meanwhile, over 20 major European solar manufacturers have become insolvent in 2012 alone.”

Seemingly harming their own efforts to contest illegal subsidy charges is the news contained in the China Securities Journal report. Government-owned China Development Bank has extended 12 Chinese PV manufacturers some $43.2 billion in credit lines since 2010, according to data compiled by Bloomberg New Energy Finance, which enabled Suntech, Trina, Yingli, JA Solar, and LDK to greatly and rapidly increase production to the point where they are now the largest PV manufacturers in the world.

China’s governing State Council has raised national goals for new solar power installations several times recently, the latest being installing 50 gigawatts (GW) by 2020, from its present 3.6 GW or so. China Development Bank is to submit a report on its recommendations to the State Council shortly. It may well contain information regarding how the state bank intends to support and help achieve the national government’s solar power installed capacity goals.

At the same time, China Development Bank’s recommendations include more strictly controlling lending to other domestic solar companies, and it won’t provide financing solely for capacity expansion, Bloomberg reported. It will also lend financial support for larger solar PV companies to acquire smaller competitors, which falls into line with central government policies aimed at realizing industry consolidation and rationalization.

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About the Author

I've been reporting and writing on a wide range of topics at the nexus of economics, technology, ecology/environment and society for some five years now. Whether in Asia-Pacific, Europe, the Americas, Africa or the Middle East, issues related to these broad topical areas pose tremendous opportunities, as well as challenges, and define the quality of our lives, as well as our relationship to the natural environment.



  • agelbert

    “Massive subsidies and state intervention have stimulated overcapacity more than 20 times total Chinese consumption and close to double total global demand.”

    Of course. A look at China’s five year plans will tell you they mean business (unlike the US) about COMPLETELY switching to renewables during the 21st century. And as global “demand”, people everywhere are clamoring for PV power at the right price. I would certainly slap a 15 kiliwatt PV array on my house if I could do it for $5,000 or less. There is ENORMOUS pent up global demand. Many of us are sick to death of oil “shocks” from wars of choice or just plain manipulated crises raising oil prices for absolutely no valid reason. We are willing, within reason and affordability, to tell big oil to put their unpredictably priced and expensive oil products and pollutants where the sun doesn’t shine!
    One needs to look at this from a historical perspective. How much demand was there for goods shipped on railroads before there were railroad tracks? PV are the “tracks” that need to be laid so we can all “ship” the sun into our appliances. Big oil knows this all too well because that is exactly what Rockefeller maneuvered us into in the early 20th century with oil products. It is a little known fact that Rockefeller funded the temperance group that pushed successfully for Prohibition. Prohibition destroyed the ethanol competiton for big oil so the hitherto refinery waste product (gasoline) could dominate. It was NEVER about drinking ethanol; it was ALWAYS about keeping farmers from competing wit big oil. The biggest “tell” to this conspiracy was the octane rating “problem” that Rockefeller had after ethanol became illegal for fuel. It’s a long and sordid story how high octane (for high compression/more powerful engines for cars and aircraft) was obtained when ethanol became illegal by the horribly poisonous tetra-ethyl lead additive (ethanol 115 versus 95 octane for gasoline).

    Guess where the money came from to buy all the electric trolley companies and replaced them with buses in American cities in the early to mid 20th century? And you thought the gasoline powered internal combustion engine was the most “competitive” alternative, didn’t you? That’s what the Norman Rockwell version of American history would have you believe. Well it wasn’t and still isn’t. That is why the disinfo about PV and other renewables is being so heavily funded by big oil.

    Big oil is a wounded beast and it is dangerous because it rightly fears death at the hand of renewables. China is looking at the only viable energy sources available if Homo sap is to survive and using capitalist price war tactics to destroy the competition. Good for them.

  • Pingback: US Solar Industry Leaders Testify before ITC on Chinese Silicon PV Dumping, Subsidies - CleanTechnica

  • zdlax

    Good to hear.

    Full disclosure, I’m long Suntech and Yingli.

    • http://cleantechnica.com/ Zachary Shahan

      ha. :D

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