No surprise, then, that the EU should be looking closely at following the US into imposing swingeing import tariffs and anti-dumping penalties.
The UK government, on the other hand, imposes no such tariff. But although there appear to be no current plans to do so, Clare Coutinho, the Energy Secretary, has expressed concern that too rapid an energy transition would make the UK unduly reliant on China. Some Tory MPs in the China Research Group have expressed similar concerns.
I have to admit to being genuinely torn. Allegations of dumping are quite plainly true. As in many other fields, China has spawned an industry that is far bigger than it needs to satisfy its own domestic demands. The surplus is cynically dumped on international markets at knockdown prices.
At the beginning of this year, China had 1,000GW of solar module production capacity a year either up and running or in development, according to the Australian based think tank, Climate Energy Finance.
Such is the excess that Chinese producers have had to slam on the brakes, with Longi, one of the biggest, planning to slash its 80,000 workforce by nearly a third this year.
China deliberately set out to take advantage of credulous Western net zero targets by massively supporting its own solar panel producers and, as with so many other industries, it has succeeded. We can only guess at the costs of securing such dominance.
There are also questions around alleged use of slave labour from persecuted Uyghur communities.
Call it clever industrial strategy if you like, but China has been extraordinarily effective in undermining any number of key manufacturing industries in the West. Solar is just one example of it.
In so doing, its planners have unbalanced or otherwise destabilised both their own and many Western economies. The Chinese economy has become too dependent on unsustainable levels of over-investment, while many Western economies – particularly the US and the UK – have become equally dependent on unsustainable levels of consumption. This great faultline in the global economy remains as unresolved today as ever.
On both security and economic grounds, there would therefore seem to be ample grounds for worrying about China’s dominance in solar panels.
If there is to be an economic dividend from the green energy transition, should we not in any case be manufacturing more of the technology that underpins it ourselves?
That’s certainly the way the White House looks at it. But when you don’t manufacture any solar panels at all, and never have done, and yet your legally binding net zero target requires you to plaster the landscape with them, then they have to be imported from somewhere. And if the Chinese are stupid enough to sell at an uneconomic price, that’s their loss and our gain.
Much the same point might be made about Chinese EVs. If you are going to force consumers down the path of net zero, then it is incumbent on policymakers to ensure the best possible value for money.
Once they’ve got us by the short and curlies, it might be argued, they could hugely increase the price, not to mention threaten to interfere with some of our critical infrastructure in the event of a complete breakdown in relations.
Yet we think nothing of the hundreds of thousands of Chinese made smartphones we buy each year. Why should solar panels be any different? Once installed, solar panels are likely to be a good sight less open to hostile manipulation than smartphones, which could easily be designed to incorporate sleeping malware.
To go green while at one and the same time significantly increasing the costs of doing so by imposing a whacking great tariff on the Chinese, or alternatively buying all our kit much more expensively from Germany and America, makes no sense at all.
It may possibly be of some benefit to the sadly depleted remnants of Europe’s solar panel manufacturing sector to have a high tariff wall, but since we don’t actually make any ourselves, there’s little if any upside in it for us.
If policymakers worry about haemorrhaging the economic benefits of the green transition, it would be better to focus their attention on other parts of the supply chain – batteries, inverters, mounting frames, cables, installation, maintenance, and other components of solar energy where local supply is capable of adding value.
China has created a major long term headache for itself by attempting to monopolise an industry where painful downsizing will eventually become inevitable once the world has largely transitioned to clean energy.
The economic and geopolitical benefits in the meantime of creating such a stranglehold are equally questionable.
Ultimately, it is always the creditor that pays the price for any consequent trade imbalance. The debtor invariably finds some way of defaulting.
