Reaction: China’s Solar Slump

From The Blaze:

Chinese solar panel makers that grew fast over the past decade are suffering big losses due to slumping global sales and a price war that threaten an industry seen by communist leaders as a role model for hopes to transform China into a technology leader.

Another looming challenge: Moves by the United States and Europe toward imposing possible anti-dumping tariffs on Chinese-made solar panels that might further depress sales.

Financial problems are likely to force painful changes in the Chinese industry including possible mergers, bankruptcies, factory closures or layoffs, industry analysts say.

Five major Chinese manufacturers, including industry leaders Suntech Power Holdings Ltd. and Yingli Green Energy Ltd., reported total losses of nearly $250 million in the latest quarter. One of them, LDK Solar Co., also reported an eye-popping loss of $588.7 million the previous quarter

Reference Morning Market Roundup: Greece Asks for More Time, China’s Solar Industry Is Suffering, German Bank Rules | TheBlaze.com.

My Reaction: 

This is a lesson in what happens when a country seeks to economically undermine its trade partners.  China has undervalued its currency, labor, and products for many years, and this is the natural consequence.  By making its prices artificially low, China has drawn manufacturing jobs out of the United States and Europe, creating high unemployment and destroying their ability to consume.  They are naturally angry about this, and are going to retaliate…to NOT do so would be foolish.

However, China is not entirely to blame for this fiasco.  Politicians and their buddies on Wall Street were eager to seize an opportunity to make a profit at the expense of small businesses and middle-class workers.  They changed the trade laws to favor China, giving them favored nation status, and turning a blind eye toward their unethical business practices.  After decades of profit-taking, they now want to complain because they are starting to realize that unemployed broke people cannot buy anything, and it is starting to affect the bottom line.

The ensuing trade war can work to the solar industry’s advantage.  Although prices will rise initially…due to tariffs and supply restrictions…new production facilities will be built using the latest technologies in order to keep up with demand.  The panels produced will be cheaper and more efficient than those currently in production…cheap enough to compete with coal, oil, and natural gas.  Solar is a technology whose time has come.

Advertisements
This entry was posted in POLITICS, Solar. Bookmark the permalink.