It looks like the trade wars between China and the European Union are heating up. China has long been accused of using unfair trade practices with regards to its exports of solar panels, engaging in heavy government subsidies and “dumping” (the act of selling below cost). So far, the EU has been looking at alternative solutions to the perceived problem, including the classic tactic of just ignoring it. Now, it looks like they may have had enough.
China is currently the world’s largest producer of solar panels and their exports account for about 80% of the market in the EU. Some see this as dominance due to dumping and believe that China is trying to run all foreign competitors out of business so that they can achieve control of the entire global market. These panels are often sold for so little that other companies can not hope to compete and currently tens-of-thousands of jobs are at stake within the EU.
The EU has talked about putting tariffs on the solar panels in order to even out the market, though until now nothing has been done. But the latest tactic has been to place a tariff of 11.8% on the imports. This is similar to the way the US handled this very same problem last year, although that response was closer to a 250% tariff. The EU is using this tariff as more of a bargaining factor than anything else, however, hoping that this will push China to the negotiating table. They have given China two months to work something out.
The Chinese response has been to express their desire to work things out, as well as to throw the EU’s words back in their faces. They have announced their own investigation into France’s wine exports, accusing the European country of dumping and adhering to unfair trading practices. While they’ve certainly made their point, I have to wonder whether mocking the EU is the best tactic.
Despite everything that’s going on, China continues to insist that they are not selling below cost, but that EU companies are artificial inflating the prices on their own panels. The question arises of whether China is just acting very aggressively in trying to run their competition out of business or whether it truly is a case of EU companies getting greedy and shutting down because they’re not making the seven-figure incomes they’re used to.
Solar panels courtesy of Roland zh
