Aerial photo taken on May 30, 2022 shows China’s first solar-tidal photovoltaic power plant in Wugen Township of Wenling, East China’s Zhejiang province. [Photo/Xinhua]
In a recent opinion piece in The New York Times, a former United States deputy trade representative pressed the panic button over a special report by the Paris-based International Energy Agency that said China currently dominates global solar photovoltaic supply chains.
According to the report, China’s share in all the manufacturing stages of solar panels (such as polysilicon, ingots, wafers, cells and modules) exceeds 80 percent, more than double its share of global photovoltaic demand. In addition, China is home to the world’s 10 top suppliers of solar photovoltaic manufacturing equipment.
The report points out that China has been instrumental in bringing down costs worldwide for solar photovoltaic products, with multiple benefits for clean-energy transition. At the same time, the level of geographical concentration in global supply chains also creates potential challenges that governments need to address.
The former US deputy trade representative, Robert Holleyman, who served in the administration of former president Barack Obama, claimed that China’s State-subsidized competition has decimated the US’ solar panel industry. The US share of solar component shipments worldwide fell from 13 percent in 2004 to less than 1 percent in 2021.
He argued that failure to create a strong domestic solar manufacturing industry leaves the US and its carbon-reduction goals not just dependent on China, but also vulnerable should China block or threaten to block its solar exports as a form of retaliation in the future.
He urged the administration of President Joe Biden to tighten tariff enforcement on China’s solar panel imports allegedly via third countries in Southeast Asia, and ensure that the US Congress reaches a spending deal for large-scale clean-energy development and solar manufacturing tax credits, with an ostensible objective of decoupling from China’s solar panel industry.
This latest saga of solar panels appears to be part and parcel of a persistent US bipartisan “China threat” narrative. Often, there is a tendency toward an indiscriminate decoupling strategy based on political correctness rather than reasoned analysis of costs and benefits.
For example, the Biden administration seems to have discovered recently that indiscriminate decoupling with or without tariffs could be a two-edged sword, hurting domestic interests by way of painful supply chain disruptions, rising costs of living and inflationary pressures on the Federal Reserve’s freedom to maneuver.
Hence, there has been recent speculation that Biden may decide to cancel some of former president Donald Trump’s tariffs on China’s household goods.
The need for the United States to take a more targeted approach to strategic decoupling is expounded in depth in a Carnegie Endowment for International Peace report. The report recognizes that the US technology base is thoroughly enmeshed with China in a larger, globe-spanning technological web.
Without a clear strategy, there are risks of doing too little or, more likely, too much, to curb technological interdependence with China. In particular, Washington may accidentally set in motion a chaotic, runaway decoupling that it cannot predict or control.
Coming back to solar panels, it is important to recognize, first, that this is first and foremost a question of productive capacity, rather than cutting-edge strategic technologies.
The world’s biggest manufacturer, China is the largest producer of many things under the sun, not just solar panels. This is enabled by a massive nationwide, interconnected manufacturing base, a global logistics network including seven of the world’s top 10 container ports (including Hong Kong’s), and …….