China Reacts to Europe Solar Trade Deal

China has largely welcomed the recently concluded solar trade agreement with Europe, according to reports. Shen Danyang, spokesman for the Ministry of Commerce, said in a statement that the conclusion of procedures to resolve the solar case within the EU are welcome in China.

English-language news service China Daily called the resolution “a good example of defusing trade frictions through high-level communications,” while its commentators hailed the agreement as a blueprint for future trade negotiations, calling for a similar permanent mechanism to be put in place to resolve incipient trade disputes.

“The solutions from Brussels are welcomed and appreciated, and both sides have set an example for dealing with disputes,” Chi Fulin, president of think tank China Institute for Reform and Development, said in the paper.

“We should set up a specialised crisis management mechanism, incorporating trade agencies, enterprises and business representatives, to deal with rising trade frictions with the EU,” said commentator Feng Zhongping, vice-president of the China Institutes of Contemporary International Relations.

He Maochun, director of the Research Center for Economic Diplomacy Studies at Tsinghua University, told China Daily that “All levels of the Chinese government – including the State Council, led by Premier Li Keqiang – got involved in the deal. The consultations were highly efficient, and it is the first time that such a case has raised such high concerns from the government.”

And Cui Hongjian, director of European studies at the China Institute of International Studies, commented that “We can say it’s a new attempt at solving trade disputes through the involvement of high-level officials.”

In an editor’s note, China Daily said the settlement should be credited mostly to the Chinese government’s “great concerns” about the matter and “efficient communication” with the EU. 

While media reports have indicated that a clerical error may have led to a number of smaller Chinese solar manufacturers being left off the list of participants now exempted from anti-dumping duties, meaning they would face duties of up to 47.6 percent in effect since yesterday, a European Commission spokesperson said,”The EC is in regular contact with the Chamber and we have not received any notification about clerical errors in the submission of the list, on the contrary, the Chamber has confirmed the correctness of the list in its offer of 27 July.” In any event, the expectation is that any such outstanding administrative issues wil be resolved over the coming weeks.

Is China Prepared?

Meanwhile, China’s state-run news outlet Xinhua reported that the nation’s solar industry faces the need for structural upgrades and raised concerns about whether its solar companies are “braced” for the new environment, which China’s Renewable Energy Industries Association (CREIA) called “the price guarantee era.”

Zha Daojiong, a professor at Peking University, said that despite China’s huge presence in the solar industry, “the country is so far a processing industry, an assembly line for the world’s solar products,” reported Xinhua.  

“A lack of core technologies has deprived China of a competitive edge in the international market,” Zha continued, saying innovation and upgrading are needed.

CREIA said in a statement that, while the agreement “will bring significant positives,” the Chinese PV industry’s dependence on Europe is “too severe.” The trade body said, “PV companies do not need to occupy the overseas markets; domestic demand is the protection of the healthy development of the industry.”

The group said celebration over the European agreement is “premature”, predicting that a “consolidation wave” is coming to the domestic market. “The better quality advantages of large enterprises will become increasingly evident,” it said, “affecting the entire industry.”

In a letter quoted by CREIA, an investment advisor and energy researcher said internal restructuring and capacity optimisation will be necessary for the PV industry to “solve the problem of idle production lines.” The writer also pointed to supply chain management issues and said downstream PV power plant construction and operation will become a major area of competition.

Predicting a shrinking European market due to the trade agreement, the group also said the government “umbrella” which has been supporting domestic PV manufacturing “is about to lose its effectiveness.” CREIA predicts company closures and “collapse”, and said government support will be “ultimately no match for the laws of the market.”

Read more solar energy news here.

Lead image: Chinese and European flags via Shutterstock

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