02 May 2012
China’s government recently issued a new Five-Year Plan for solar that provides for even greater government control and support of its industry, according to an analysis commissioned by the Coalition for American Solar Manufacturing (CASM).
The plan to fuel China’s export-intensive solar-industry campaign calls for a number of government initiatives, including new policy, financial and price subsidies; more support in industry, financial and tax policy; and further aid with development and production of equipment used to produce polysilicon, silicon ingots, wafers, cells and panels within the crystalline-silicon solar industry. Moreover, the portfolio includes plans to support industrialization of China’s as-yet-undeveloped thin-film industry, specifically harnessing silicon and copper indium gallium diselenide solar technologies.
The analysis by Wiley Rein LLP in Washington, D.C. (US), focused on China’s 12th Five-Year Plan for the Solar Photovoltaic Industry, issued in February 2012 to expand on China’s broader 12th Five-Year Plan for National Economic and Social Development. Wiley Rein is representing CASM, a coalition of more than 190 employers representing more than 16,000 Americans, in advancing trade cases against the Chinese solar manufacturing industry. In a partial preliminary determination in March, the Department of Commerce announced that at least 10 categories of Chinese subsidies for its producers of solar cells and panels were illegal.
As in previous iterations, the plans designate solar among seven “strategic emerging industries” that warrant massive government support, preferential treatment and tight control, according to the analysis. News reports put total subsidies for all seven industries at $1.5 trillion. The recently published solar plan, which covers the period through 2015, reflects the Chinese government’s resolve to ensure the industry’s continued rapid development by directly managing its planning, policy and growth.
Also, according to the analysis, the solar Five-Year Plan calls for the Chinese industry’s continued global expansion and “internationalization” in keeping with China’s “Going Abroad” strategy.
China has amassed production capacity that is 32 times greater than domestic demand, resulting in about 95 percent of Chinese solar production being exported overseas. CASM contends that China’s illegal subsidization of its export drive has enabled its industry to dump product in the US market and unfairly capture market share since 2008. During the same period, the number of China’s solar manufacturers listed among the world’s 10 largest has rocketed from just one to seven in 2011. Meanwhile, at least 12 crystalline silicon US manufacturers have shuttered plants, declared bankruptcy or staged layoffs.
Significantly, the National Renewable Energy Laboratory has concluded that Chinese producers face a cost disadvantage in producing and delivering solar technology to the US market, compared with domestic producers.
China’s new Five-Year Plan provides even greater support for exports than previous government plans that delivered more than half of world industry market share to the Chinese industry, according to the analysis. The 2011-2015 plan calls for the consolidation of “the industry’s position in the international market,” partly by identifying and promoting “national champions,” so that “Chinese PV enterprises’ international influence will be greatly enhanced” and be better able “to cope with international competition and market risks.”
Aside from the more than 30 Chinese subsidy programs that CASM says are illegal, including the 10 that the US Department of Commerce has preliminarily sanctioned, the new 12th Five-Year Plan for the Solar Photovoltaic Industry unveils a host of new government initiatives to continue to fuel China’s export campaign, according to the Wiley Rein analysis. The plan covers virtually every detail of every phase of industrial development, including: where new industrial siting should take place, precise levels for environmental performance improvement and precise standards for cost and power-conversion efficiency improvement.
In the first major ruling in the trade cases, the US International Trade Commission issued a unanimous preliminary ruling on 2 December 2011 that Chinese trade practices are harming the US domestic solar industry. On 17 May, the Department of Commerce is expected to announce its preliminary ruling on whether Chinese manufacturers have illegally dumped products in the US market.
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