New Report Exposes China’s Exploitation of U.S. Solar Market and Inflation Reduction Act Tax Credits

WASHINGTON — The Coalition for a Prosperous America (CPA) released a statement regarding a new report from Horizon Advisory, which sheds light on how China’s state-subsidized solar industry is undermining U.S. manufacturing while exploiting billions of dollars in tax credits provided by the Inflation Reduction Act (IRA). The report details how China has strategically positioned itself to dominate the U.S. and global solar markets through a combination of government subsidies, overproduction, and exploitation of U.S. policy loopholes—most notably, the tax credits created by the IRA. Read CPA’s summary of the report here.

As first reported by Bloomberg, the Sunburn report highlights how a “surge of US investment by Chinese solar-panel makers threatens to enhance Beijing’s dominance of the sector.” China’s solar industry, backed by the Chinese Communist Party (CCP), is undercutting U.S. solar manufacturers by flooding the U.S. market with cheap products. This practice, combined with a lack of robust trade enforcement, has made it difficult for American companies to compete. Furthermore, Chinese firms are taking advantage of U.S. taxpayer-funded IRA tax credits, intended to boost domestic manufacturing, to expand their operations within the U.S., deepening their stranglehold on the solar market.

The report also exposes the lobbying efforts of the Solar Energy Industries Association (SEIA), which has consistently advocated for policies that benefit Chinese solar companies, even as U.S. manufacturers struggle to compete. As The Guardian recently highlighted, SEIA “deployed a “multimillion-dollar lobbying and public relations campaign to keep the cheap Chinese imports coming.” SEIA’s lobbying led to the imposition of a solar tariff moratorium that allowed Chinese firms to circumvent U.S. trade laws, further entrenching their dominance in the market.

“China’s ability to exploit IRA tax credits at the expense of American taxpayers, while tightening its grip on both U.S. and global solar markets, poses a serious threat to U.S. manufacturers who have invested billions to expand production and create American jobs,” said Nick Iacovella, Senior Vice President at CPA. “As this report highlights, American taxpayers are unknowingly funding Chinese solar firms’ expansion, all under the guise of clean energy investment. Incredibly, during ‘China Week,’ Speaker Mike Johnson and Republican leadership failed to advance any meaningful legislation to tackle this pressing issue. The stark irony is that the IRA was designed to strengthen U.S. supply chains and domestic manufacturing in renewable energy, yet it’s giving China the advantage, allowing them to establish operations here and outcompete American companies.”

The Horizon Advisory report titled, “Sunburn: The Chinese Communist Party’s Extended Dominance of the Solar Supply Chain through Beachheads in the United States,” outlines China’s strategic pursuit of energy dominance, particularly in the solar photovoltaic (PV) sector. The report makes the following key points:

Extensive Chinese Subsidization: Chinese solar companies receive billions of dollars in government subsidies, allowing them to produce solar components at artificially low prices and dump them into global markets.
Exploitation of U.S. Policy: China is capitalizing on the IRA’s Section 45X tax credits, which were intended to strengthen U.S. domestic manufacturing, but are now benefiting Chinese firms that set up operations in the U.S.
SEIA’s Role in Undermining U.S. Industry: The report reveals how SEIA is a proxy for Chinese interests, documenting SEIA’s connections to Chinese companies and its consistent efforts to weaken U.S. trade enforcement, enabling China’s illegal trade practices to continue unchallenged.
China’s Stranglehold on the U.S. Solar Market: China’s dominance in solar manufacturing is part of a broader strategy to control critical industries. By leveraging government subsidies and localization strategies, Chinese companies have been able to increase their foothold in the U.S. market. Chinese solar firms set up assembly plants in the U.S. to access federal tax credits, including those provided by the Inflation Reduction Act. This strategy allows Chinese firms to benefit from U.S. incentives while retaining control over the high-value segments of the solar supply chain in China.

The Sunburn report underscores the need for immediate policy action to close the loopholes that allow China to exploit U.S. trade laws and federal programs like the IRA. CPA has long-called for excluding China from benefiting from IRA tax credits. As reported by The New York Times, a CPA economic analysis found “that Chinese manufacturers could earn up to $125 billion in tax credits under the law.”

CPA supports bipartisan legislation introduced in July by Senators Sherrod Brown (D-OH), Bill Cassidy (R-LA), Jon Ossoff (D-GA), and Rick Scott (R-FL) that would prevent Chinese companies from receiving IRA 45X tax credits. CPA also supports similar legislation introduced by U.S. Senator Marco Rubio (R-FL) and U.S. Representative Carol Miller (WV).

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