The War Over Sunshine

Punitive U.S. tariffs on Chinese solar panels help no one.

Overproduction, cheap imports, dumping prices — things for the solar branch are going badly because of significantly stronger competition from China. In response to the demise of many companies, and despite its recent status as a sunrise industry, the U.S. Department of Commerce has reacted to the complaints by imposing a 250 percent punitive tariff on solar products manufactured in the People’s Republic.

Thus far, the U.S. Commerce Department has not been able to prove any price dumping on China’s part. At least, they haven’t discovered any proof that the Chinese government is coddling their domestic solar industry to the extent that they’re able to offer their products on the world market below production costs. Beijing doesn’t deny it subsidizes solar research, but so do many other nations.

That begs the question why Chinese solar products are so much cheaper than those produced in the United States or Europe. The answer to that is the same one that applies to practically every other industrial branch that has migrated to China over past decades: Cheap labor. But the novel difference today is that it’s not foreign manufacturers who are adept at exploiting this economic advantage, but Chinese companies themselves.

One can’t properly blame the Chinese solar companies for the lower wages. That’s due to an overall lower wage level in China that can’t be raised to Western standards in a still developing country, at least not without upsetting the general price structure.

Most solar companies in China already pay higher average wages when compared to other domestic industries. Punitive tariffs will only increase pressure on wages and that will hurt everyone.