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Countering US trade protectionism

Anti-dumping and anti-subsidy investigations into Chinese solar energy products will hurt jobs and industries in both countries

Facing competitive pressure from the rise of Chinese industries, the United States has arbitrarily imposed trade relief measures against China's clean energy exports instead of allowing fair market competition.

On Feb 14, the US International Trade Commission ruled that solar energy products imported from the Chinese mainland and Taiwan have caused "material injury" to US producers, which has paved the way for the Department of Commerce to set preliminary duties in the months ahead. This time the investigations will include almost all kinds of crystalline silicon photovoltaic products, suggesting that trade disputes between China and the US will be more extensive and frequent in the future.

 

 

Countering US trade protectionism

 

 

Countering US trade protectionism

 

This is the second time within two and a half years that the US has initiated anti-dumping and anti-subsidy investigations into Chinese solar energy products. Because the US Department of Commerce's previous ruling only referred to photovoltaic cells imported from the Chinese mainland or photovoltaic modules using mainland photovoltaic cells, many enterprises turned to OEM photovoltaic cells produced in Taiwan to offset the high penalties imposed on mainland products.

Yet this time the scope of the new investigation has been extended in order to block the Taiwan import channel. If the US Department of Commerce finally decides to include Taiwan's solar energy products in its sanctions, the cost performance advantage of Chinese mainland's photovoltaic modules in the US market will be further undermined.

Anti-dumping and anti-subsidy investigations into China's new energy products are unjustified and irresponsible, which is typical of US trade protectionism. The dispute over economic interests is only the superficial cause of investigations. The US is resorting to such measures in a bid to keep its dominant position in the high-tech field. It is reluctant to see the rise of China's technological industries, as they may threaten the US' pole position.

China and the US almost match one another in new energy, and through the investigations, the US is seeking to contain China's rapid development in this sector, in order to retain the final say in setting international technological standards and maintain its dominant position in new energy.

With the global focus on establishing a green and low carbon economy, each country bears the responsibility of reducing its carbon emissions. Upgrading domestic industries and adjusting the economic structure have become urgent tasks for both China and the US. Thus promoting their new energy industries is a necessary development choice for both countries.

 

Countering US trade protectionism

 

 

Countering US trade protectionism

 

Top 10 trading partners of the Chinese mainland

Top 10 cities with worst smog in China

The Barack Obama administration also regards the new energy industry as a channel to realize its National Export Initiative, which aims to double the US' export volume and create 2 million jobs within five years. But the US trade relief measures such as anti-dumping and anti-subsidy investigations will provoke trade friction with its main competitor in the new energy sector, which may eventually affect US jobs.

 

Countering US trade protectionism

 

 

Countering US trade protectionism

 

China's Ministry of Commerce has responded by urging the US to carefully handle the trade frictions between the two countries and called on the Obama administration to start dialogue and negotiations with China to properly solve the current dispute and terminate the investigation procedure. The US government should understand that in some industries, China and the US are closely interrelated and protectionism will harm both.

If the US uses the excuse of anti-dumping and anti-subsidy to impose high penalties on Chinese photovoltaic products, China's exports of these products will certainly be reduced. This will undermine the interests of US downstream enterprises, as Chinese enterprises will import less related raw materials and equipment from US producers. Meanwhile, China's major photovoltaic enterprises are all listed companies in the US, so the anti-dumping and anti-subsidy investigations are undermining the interests of US investors.

There is much room for cooperation between the US and China in new energy. The US should focus on the future development of the new energy sector and look to strengthen its cooperation with China to realize win-win results, rather than restricting competition and cooperation through frequent and short-sighted trade relief measures.

For now, China should pay close attention to how the investigations are progressing and try to estimate the effect they may have on its photovoltaic industry, and resolutely and reasonably use international trade regulations and mechanisms to safeguard China photovoltaic industry's legal rights.

Besides actively responding to the investigations, domestic enterprises should work together to collect conclusive evidence to counter the claims that China's photovoltaic products are sold below the fair value of the products in the US market and China's producers and exporters receive "improper" government subsidies.

China's new energy associations such as the China Renewable Energy Society and related enterprises should also actively work together to seek resolution to the dispute during the investigation process.

The author is a researcher with Chinese Academy of International Trade and Economic Cooperation.

 

Countering US trade protectionism

 

 

Countering US trade protectionism

 

Top 10 trading partners of the Chinese mainland

Top 10 cities with worst smog in China
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