Donald Trump’s protectionist stand on solar panels has been projected to cause job losses in the United States. In fact, the US Solar Energy Industries Association anticipates job losses as high as 88,000, greater than the total employment of a bit over 50,000 by the coal mining industry. Since it happens that India is also entering a protectionist phase, protectionism seems to be growing.
At the same time, Chinese domestic demand for solar cells and modules is projected to decline. Combined with the growing protectionism, this is expected to produce a difficult period for the Chinese solar industry, according to reports in the South China Morning Post and Yahoo Finance. They say it looks like gloomy times are coming for the Chinese solar industry.
My advice is, “Don’t bet on it.”
Chinese solar production has been growing extremely quickly for years. Part of this has been a result of a highly competitive position by Chinese solar manufacturers worldwide. It is even more because of China’s domestic market. But Chinese companies do not need either of these to sell far more solar products than they currently do. And the Chinese government has profoundly important reasons to support solar production that is going abroad. They can go to countries that have little or no ability to make panels of their own, even those who cannot afford to pay for them.
Beijing is trying to supplant the influence of the United States worldwide with its own power. The extent of its efforts and the success it has found so far are impressive, as can be seen in a succinct article in the Free Press Journal, published in Mumbai. According to that article, the “One Belt One Road” initiative currently being pursued by the Chinese government is promising $1.2 trillion to be injected into struggling economies worldwide. That is in addition to the $200 billion already delivered.
One of the goals of the program is to marginalize American world influence. But another goal is to establish Chinese presence in a way that can be used in the future to build the country’s commerce, trade, and military. For example, part of that goal is to develop or take over ports. China already has over twenty port sites in Africa alone.
From China’s point of view, one of the beauties of its loans in the developing world is that it cannot go wrong. If the loan is paid back with interest, that is good for China. But if the debtor country defaults on it, that may be even better. When Sri Lanka defaulted on a substantial loan, China took a port in lieu of payment, which it will hold under lease for 99 years. How much was the port worth? How much was Hong Kong worth to Britain? This is a subject the Chinese have studied for a long time.
The issue goes beyond the Eastern Hemisphere. After Hurricane Maria, the Caribbean island of Dominica needed assistance desperately. Since it did not get any from the United States, it turned to those who reached out a helping hand. The result was a set of agreements, both economic and military, between the Dominica and China. And those agreements are not the only ones.
There are about 1.2 billion people in the world without electricity. But the world is being polluted by toxins and greenhouse gases, so coal, oil, and natural gas do not offer wise alternatives to going without for many developing countries. Furthermore, solar panels are starting to compete with fossil fuels for price. China is in the enviable position of being able to take advantage of the disadvantaged positions of developing countries by offering them loans to buy very low-cost solar power, bringing them into the 21st century. And if they go into default, it just adds another opportunity for a cheaply bought port for commerce — or a cheap site for a military base.
This has consistently great advantages from China’s point of view. Beijing can subsidize its solar industry without a lot of thought about how the solar products are used. They will go abroad in the interest of Chinese influence. This increases employment in China. It increases Chinese industrial might. It helps the fight against climate change. It increases the Chinese moral authority and enhances its leadership position. In fact, the whole thing is a win for everyone involved.
The United States, unfortunately, is not involved. The Trump administration has abandoned the Third World, a move that China has used very much to its own advantage in its propaganda. One article in Xinhua said, “Ignoring climate change and global efforts, Trump’s America only focuses on its own short-term interest, while recklessly shirking its responsibility, and even damaging other countries’ benefits and global sustainable development.” That is putting the issue mildly.
We cannot be great without providing world leadership. We cannot lead the world by refusing to engage. We have lost our leadership position when we abandoned the Paris Climate Accord. The US has lost its place as the largest world economy. With help from Russia, we have allowed the whole concept of democracy to be discredited. And we are doing these things to maintain leadership in obsolete technologies, for the sake of obsolete industries, guided by obsolete interests.
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