Solar equipment manufacturers based in the United States want the government to impose taxes on more than $1 billion Chinese imports. They joined the clamor from the wind power industry to seek compensation for the unfair state aid given to foreign companies.
Chinese companies utilize cash grants, discounts on raw materials, loans, tax incentives, and currency manipulation to improve exports of solar power cells. According to Gordon Brinser, president of SolarWorld Industries America, illegal subsidies given to China is like steroids to an athlete. China managed to control the US solar market, manufacturing of solar panels as well as jobs.
US companies accused China of dumping solar panels in the country. This led to the drop in prices of solar cells and solar panels. The lawmakers and union leaders demand from the Obama administration to pursue the unfair trade complaints against China.
The United States is improving its efforts to make China comply with World Trade Organization rules. US Trade Representative Ron Kirk said that he sent the WTO a list of programs that China failed to disclose, which is required by the rules of the organization.
The US Senate passed a measure last October 11 that seeks to punish China for keeping its currency undervalued. Chinese officials said that the bill could damage the trade relations and hinder global economic recovery.
China’s Suntech, which is the world’s largest solar panel maker, said that the trade complaints could undermine the efforts made by the producers to challenge the conventional forms of electricity production.
Three major solar companies from the United States have failed since August. This include Solyndra, which received a $535 million loan guarantee but still folded due to the inability to stay afloat as prices dropped.
Prices of solar panels decreased by 40 percent in 2011 as manufacturers from China increased their production capacity. The top ten silicon panel makers have doubled their capacity last year. Soalr equipment companies are starting to lose money as the average operating margin dropped to -5.9 percent in the second quarter compared to the +12 percent a year before.
Within the first seven months of the year, China shipped $1.4 billion worth of solar panels to the United States. This is over the $1.2 billion for the whole of 2010. Imports from the Philippines, South Korea, and India also increased. Solyndra said that imports of Chinese crystalline solar cells and panels increased more than 300 percent from 2008 to 2010.