WASHINGTON — An alarming new report from Horizon Advisory details China’s distortion of the global solar industry and how that threatens the national and economic security of the United States as it “risks making the United States dependent, and dependent on an adversary, for a strategic, future energy source.” The report, titled “Out of China’s Shadow: Building a Clean, Trusted Solar Industry”, documents how China’s stranglehold on the global solar market exacerbates the industry’s environmental footprint due to China’s dirty, high-emission and coal-intensive energy production to support its solar production.
A recent analysis from the Coalition for a Prosperous America’s (CPA) Economics Team shows that a new tidal wave of solar imports from China—combined with Biden administration decisions—could put the success of the Inflation Reduction Act (IRA), which is spurring dramatic new investment in U.S. manufacturing capacity, in jeopardy. This massive overproduction is creating an excessive global supply of solar panels, leading to rapid price-cutting.
Horizon Advisory’s report also details how “feckless” policy decisions by the U.S. government have actually supported China’s continued success to monopolize the global solar PV industry.
“China’s success has also been a function of feckless US policy; efforts that are riddled with loopholes from inception, failures of enforcement, and exemptions encouraged by political and economic interests that themselves depend on Beijing,” the Horizon report states. “The 2018 201 tariffs on China’s solar products, for example, were largely neutered due to exemption of bifacial solar panels and a high quota on what could be imported without tariffs. In 2022, the Biden Administration imposed a two-year moratorium on anticircumvention tariffs on imports of solar cells and modules from Cambodia, Malaysia, and Vietnam.
“This moratorium holds even after a Department of Commerce probe found that Chinese producers were indeed evading US tariffs by shipping products through those third-party countries, which make up some 80 percent of US panel supplies,” the Horizon report continues. “Enforcement of the UFLPA continues to be scattershot, at best. And the Inflation Reduction Act – the flagship US industrial policy, the multi-billion dollar, taxpayer-funded effort to restore US production and resolve dependence on China in strategic industries – has no provisions in it to prevent Chinese companies from doing precisely what they’re doing: Reaping its benefits, to cement their dominance.”
An economic analysis from Jeff Ferry, Chief Economist for CPA, found that Chinese companies are projected to benefit from at least $125 billion in federal tax credits under the Inflation Reduction Act. Concerningly, this tax windfall would be in addition to the massive subsidies that the Chinese government provides to its solar industry.
According to the Horizon Advisory report, “Beijing’s state support for the industry continues. In 2022, the PRC’s four largest solar PV manufacturers reported receiving more than 2.6 billion RMB in direct government subsidies. These include solar PV-focused funds, more general industrial support measures, and backing for participating in PRC government science, technology, and industrialization projects. And direct subsidies are just the tip of the iceberg. The PRC’s energy industrial policy also includes indirect subsidies like low-cost energy, minimal environmental regulations, low-interest loans, tax breaks, land grants, export credits, and preferential tariffs.”
The Horizon Advisory report also makes a strong case for strengthening the enforcement of the Uyghur Forced Labor Prevention Act (UFLPA) or instituting country-wide withhold release orders (WROs) on solar products from China. Despite the UFLPA’s efforts to prohibit imports from Xinjiang, including solar products, “At least ten Chinese polysilicon manufacturers have initiated projects to expand their production capabilities since 2022, for example, to the tune of approximately two million metric tons (MT) – most of it in Xinjiang and Inner Mongolia…And China’s ingot, wafer, cell, and module production are expected to grow some 173, 196, 257, and 189 percent by 2027.”
“Horizon’s report is an alarming documentation of the CCP’s dedicated predation to dominate the global solar market by providing massive subsidies to its solar industry, using forced labor and coal-fired power plants, and exploiting terrible policy decisions by the U.S. government,” said Michael Stumo, CEO of CPA. “It’s time for the Biden administration and Congress to show they are serious about building a domestic solar manufacturing industry. That means stopping China from continuing to flood the U.S. market with cheap, subsidized solar products and prohibiting Chinese solar firms from being eligible for Inflation Reduction Act tax credits.”
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