What do the U.S. and China solar markets have in common in 2011?

Well, for one, this is the year that both the U.S. and China markets clear the one-gigawatt hurdle of annual installed solar. The U.S. crossed that line sometime in September and China will cross that line by around December 31, according to the intrepid solar analysts at GTM Research.

The other thing they have in common is that both countries are now investigating anti-dumping trade practices against each other.

One of the -- perhaps unintended -- consequences of SolarWorld's claim that China is dumping solar panels into the U.S. below cost has arrived. The U.S. Department of Commerce and the International Trade Commission opened their year-long investigation in November.

China has now launched a claim that the U.S. has been dumping polysilicon feedstock into China and that this has forced a number of Chinese companies out of business.

Domestic Chinese manufacturers have asked their Ministry of Commerce to launch a dumping and subsidy investigation into sales of U.S. solar cells in China, according to China Daily. The China Photovoltaic Industry Alliance (CPIA) is finalizing a complaint alleging that U.S. manufacturers are selling their products at prices below cost in China, according to the same article.

The Chinese alliance is also preparing another petition regarding an investigation into subsidies allegedly received by U.S. manufacturers. Recall that the SolarWorld claim identifies a number of subsidies that China's government provides to their solar industry, including below-market costs on raw materials and discounts on energy and land. CASE, a U.S. organization comprised of MEMC and a number of downstream players disagrees with the trade action as a strategy.  

A representative from CPIA said that "foreign firms have cut prices on polysilicon to drive Chinese manufacturers out of business," adding, "This has caused the industry to lose more that 2,000 jobs in one province alone," according to the quoted source. According to the claim, "Foreign countries, led by the United States, have dumped 47,500 tons of polysilicon in China in 2010, 20,000 tons more than the previous year, according to statistics from the Alliance."

Also according to the CPIA, Hemlock Semiconductor Group, a U.S.-based polysilicon company, got about $169 million in subsidies in 2010 and the Renewable Energy Corporation got $155 million in subsidies for polysilicon production. The source estimated that sales of polysilicon in the Chinese market will reach 60,000 tons this year.

So, entities in the U.S. are trying to keep China from allegedly dumping PV panels in the U.S. and entities in China are looking to keep the U.S. from dumping polysilicon in China.

Who has the most to lose? It's a complicated question, to say the least. And the question elicits high emotion, as it involves money, business, and patriotism. In terms of job loss, which is the main contention of the SolarWorld claim, most of the 100,000 solar jobs in the U.S. are downstream, not in manufacturing. So it could be claimed that U.S. employment figures actually benefit from low-cost solar panels.

The U.S. has a positive trade balance with China, mostly from its shipments of polysilicon. A tariff on polysilicon would change that. Shutting the U.S. out of the Chinese market would be less than constructive as it has potential to be larger than the U.S. market.

Source: GTM Research

Suntech's Chief Commercial Officer, Andrew Beebe, said he expects China to be a "multi-gigawatt market" in 2012. In an article in Financial Times, Yingli Solar's Chairman and CEO Mr. Liansheng Miao was quoted as saying, “We strongly believe that China will quickly evolve into one of the largest and most important solar markets in the world."

At any rate, China could surpass the U.S. in installed PV within a year or two. China's cumulative capacity will double this year to two gigawatts due to its feed-in tariff.

Here are some billion-dollar questions on these anti-dumping claims:

  • What is the impact on the solar industry when China becomes one of the larger end-users of photovoltaic modules?
  • What is the impact on trade issues?
  • How will American suppliers like First Solar, SunPower, GT Advanced Technologies, and MEMC fare in this new China-as-end-user era?
  • What really drives job creation in solar -- manufacturing or installation?