New energy exports face trade barriers

Exports of new energy and energy-saving products will be targeted by trade barriers in developed countries, led by the United States, a commerce official warned.

To offset this, exporters will need to improve technology and their capacity for innovation to enhance competitiveness, said Zhang Yujing, president of the China Chamber of Commerce for the Import & Export of Machinery & Electronic Products.

Zhang’s remarks follow the US Commerce Department’s decision last week to investigate if Chinese companies are selling solar cells below cost and receiving illegal government subsidies. The investigation came after a petition was lodged by a group of US solar companies.

The ministry said in a statement on its website last week that “China is very concerned about the anti-dumping, anti-subsidy investigation into Chinese photovoltaic (PV) solar cell producers, and it will hurt bilateral cooperation in the clean-energy sector as well as the US solar industry”.

Zhang warned that a trend was emerging in developed countries to erect trade barriers against exports of new energy and energy-saving products to protect their own industries.

Although the US economy recorded solid growth in the third quarter, easing recession fears, economists warned that the recovery remained shaky. The EU is trying to cope with debt woes.

China has been a victim of trade protectionism for years, especially since the global financial crisis.

But now signs are emerging that high-end products, rather than shoes and clothes, are being targeted.

China has been hit by 602 trade remedy cases worth $38.98 billion since entry into the World Trade Organization a decade ago.

In October 2010, the US announced it would investigate China’s clean energy policy, claiming that the government had subsidized certain companies.

Trade protectionism targeting China will be increasingly common, especially regarding high-end goods, Sun Zhenyu, the former Chinese ambassador to the World Trade Organization, said.

And protectionist measures taken by the US could be followed by the EU, said Jiang Heng, a researcher at the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce.

“If the global economy remains sluggish, it is possible that the EU will follow suit and also set up barriers for Chinese PV solar products.”

During the past few years, China’s new energy sector has witnessed rapid growth in output and exports. PV solar cells are primarily produced for export. Outstanding domestic growth in the sector threatens counterparts in developed regions, including the US, Zhang said.

Yingli Green Energy Holding Co is the third-largest solar panel maker in the world. The China-based company’s sales in 2010 surged by 72 percent from a year earlier.

Trina Solar Limited, a leading Chinese manufacturer of photovoltaic modules, said its total net revenues in 2010 increased by 119.8 percent annually to $1.86 billion, and gross profit grew by 146.4 percent to $584.4 million.

In October 2009, the Obama administration announced a $151 million investment in developing the new energy sector.

It had previously said that it will invest $50 billion into the green energy industry as part of its $789-billion stimulus bill of 2009.

Washington does not want to see a huge influx of goods, stamped “Made in China” flowing into the US, experts said and any extra duties will damage exports.

It’s estimated that up to 95 percent of Chinese PV solar products are exported to the US and Europe. And 15 to 20 percent of Chinese exports go to the US market.

“The Chinese PV solar industry will have a really hard time if the US imposed tariffs,” Gao Hongling, deputy secretary-general of the China Photovoltaic Industry Alliance, said.

In October, the US arm of SolarWorld AG, a leading German producer, led a group of US solar companies to petition for 100 percent tariffs on Chinese PV solar cells.

For Zhang, Chinese enterprises have to “add investment on technology and product innovation, otherwise we will find it harder to establish a foothold in the developed markets”.

Wei Qidong, former secretary-general of the Photovoltaic Industry Alliance in Jiangsu province, where most solar companies are located, said that Chinese companies could consider establishing factories overseas, create jobs and reduce trade frictions.

China-based Suntech Power Holdings Co Ltd, the world’s largest producer of silicon-based solar panels, established its first factory in Arizona in 2010 and is planning to establish new factories in other US states.