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The solar sector shows how China carries out its trade policy: it chooses industries to dominate, floods them with loans, and corporations will fight.
By Keith Bradsher
Keith Bradsher, who has been covering China’s sun since 2009, reported from Changsha, China.
For the past 15 years, China has dominated the global solar energy market. Almost all of the solar panels on the planet are manufactured through a Chinese company. Even the appliances needed to make solar panels are almost entirely made in China. The country’s solar panel exports, measured through the amount of electrical power they can produce, rose another 10% in May compared to last year.
But China’s domestic solar panel is in crisis.
Wholesale costs fell almost in part last year and have fallen 25% this year. Chinese brands are racing to attract consumers by cutting costs well below their costs, while continuing to build more factories.
The drop in prices has had a strong impact on Chinese solar companies. Inventory prices for its five biggest brands of panels and other appliances have halved in the past 12 months. Since late June, at least seven major Chinese automakers have warned that they will announce heavy losses for the first part of this year.
The turmoil in the solar energy sector, against a backdrop of gigantic trade capacities and booming exports, highlights how China’s trade policy works. The government made the decision 15 years ago to give solar power a giant and then let corporations get rid of it. Beijing has shown wonderful tolerance by allowing large numbers of corporations to stumble or even fail.
Something is going down in the automotive sector. Annual car sales in China amount to about 25 million, more than any other country, although barely a fraction of the country’s vehicle production capacity. Chinese automakers are now following the solar industry’s lead by slashing costs and expanding exports.
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