America Deserves A Solar Manufacturing Industry

Dave Johnson

America used to manufacture silicon chips. Now much of that industry has moved to China. Solar-panel manufacturing will be a huge industry of the future and America deserves to have a chunk of that industry and the jobs and income that industry will bring. But powerful forces are fighting to make sure this industry ends up in China, too. This is about American jobs and our country’s ability to make a living in the future.

Fighting Back Against Trade Violations

The Obama administration is trying to help the country develop a solar-panel manufacturing industry. But powerful forces are fighting their efforts. (See “Solyndra“.)

Last year the Commerce Department declared that China was “dumping” solar panels — selling below cost to drive American companies out of business — and imposed tariffs on imported Chinese solar panels in response. I wrote about this in a series of posts because this is such an important issue; namely, who will own a piece of the jobs and trillions of dollars that will come from this industry? Please see Tariffs On Chinese Solar Might Help Prevent The Next Solyndra, German Solar Companies Also Bring Trade Complaint Against China, Will Conservatives Support American Companies … or Chinese?, Romney, Republicans Again Side With China Over US Companies, Conservatives Demand Surrender To China and others.

Many Wall Street and other “Serious People” types are joining conservatives, coming down solidly on the side of China in this battle. Why?

China Doubles Down

Now China is doubling down on efforts to capture this vital industry-of-the-future. China imposed a tariff on American raw materials at the very time they are engaged in an effort to bolster their domestic raw-materials companies. And again, many Americans are siding with China against America.

Washington Post Sides With China

The Washington Post recently ran an editorial, US tariffs on Chinese solar panels boomerang that sums up the Wall Street-”Serious People”-conservative case against U.S. manufacturing. The editorial argues against enforcing trade rules because we might rile up the Chinese, who might then “punish” American companies in response. The editorial argues that China’s illegal subsidies lower prices, so all is good. (Never mind that lower prices also kill US-based companies and industries — and jobs.)

The Post’s editorial argues that America’s “solar industry” does not depend on panel production, because the “domestic installation and maintenance” industry is “exploding,” “partially fueled by access to cheap Chinese equipment.” Never mind that manufacturing brings in income while installation and maintenance in the U.S. of panels manufactured in and imported from China does not bring income into this country.

Another Year, Another Pro-China Editorial

A year ago the Post published pretty much the same editorial, “A crackdown on solar panels threatens U.S.-China trade,” in which the Post complained about trade enforcement in the solar-panel industry. Last year the Post wrote, “It’s true that Beijing has channeled state resources into solar-panel manufacturing. Chinese firms now claim two-thirds of the world market.” But, the Post argued, this brings low prices… and,

“It’s hard to see what public interest this would serve. Most of the U.S. solar industry’s growth has been not in manufacturing but in services such as installation and maintenance. And if the Chinese want to subsidize U.S. solar-panel buyers for the time being, there’s a good case to let them.”

This year the Post mocks the Obama administration for enforcing trade rules because low Chinese solar-panel prices are not “a problem to solve.”

Yet the recent explosion in the U.S. solar industry has centered not on panel manufacturing, but on domestic installation and maintenance. That, in turn, was partially fueled by access to cheap Chinese equipment — which the tariff policy views as a problem to solve.

Why Did China Impose Tariffs On Raw Materials?

So OK, the Post wants China to get this industry-of-the-future and the jobs and income that will come with it. But they go further, siding here with China after China imposed tariffs on American raw materials used to make the panels.

In the editorial the Post complains that China has responded to our enforcement of trade rules by imposing a tariff on American polysilicon, a raw material used in solar panel manufacturing. (Polysilicon is a purified form of silicon that is used to manufacture electronic “chips” as well as solar panels.) China says this “punishes” American companies, which means the effort to fight China’s illegal dumping has “boomeranged.”

The Post might wonder how China benefits from “punishing” American raw-materials suppliers, when they use those raw materials to make the panels. This fact might prompt the Post to think that perhaps “punishing” American companies for enforcing trade rules is not China’s real agenda with these tariffs. A recent Reuters story, As solar panels pile up, China takes axe to polysilicon producers, explains that China is currently strengthening its own raw-materials sector,

The polysilicon sector, which has around 40 companies employing 30,000 people and has received investment of 100 billion yuan ($16 billion), suffers from low quality and chronic over-capacity as local governments poured in money to feed a fast-growing solar panel industry, for which polysilicon is a key feedstock.

… People in the polysilicon industry say the moves will halve China’s production capacity to 100,000 metric tons (110231 tons) a year, leaving around 10 relatively strong firms with better technology and cost efficiency.

… Their plight is made worse by cheaper, and better quality, imports from producers such as MEMC Pasadena Inc and Michigan-based Hemlock Semiconductor Group – a venture of Dow Corning, Shin-Etsu Handotai and Mitsubishi Materials Corp – and Norway’s Renewable Energy.

Of the 69,000 metric tons of solar-grade polysilicon China consumed in January-June, 41,000 metric tons were imported, according to industry data.

So China is in the middle of an effort to bolster its own polysilicon industry, and it imposes tariffs on ours. Get it? The tariffs are not about “punishing” us for enforcing trade rules, they are another trade violation designed to further increase China’s grip on the vital solar-manufacturing industry. And The Washington Post cheers them on.

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