Chinese solar firms are ever-nimble and go to places where US tariffs do not reach

The U.S. tariffs on Vietnam and three other Southeast Asian nations have prompted some of the largest Chinese-owned factories to cut production and lay off workers.

In the meantime, a number of Chinese-owned solar power plants are being built in Indonesia and Laos. These are outside of Washington's protections on trade. Reports show that their planned capacity would be enough to provide about half of the solar panels installed in the U.S.

Chinese solar firms have shrunk their output in existing hubs, while building new factories elsewhere. This has allowed them to avoid tariffs and to dominate the U.S. market and global markets in spite of successive U.S. tariffs for more than a decade.

Although Chinese companies have been shifting their solar manufacturing to Indonesia and Laos for years, it was not reported how large the shift has been in the latest phase. This article interviewed more than a dozen individuals in five countries including employees of Chinese plants, officials from non-Chinese companies that manufacture solar energy, and lawyers.

William A. Reinsch is a senior advisor at the Center for Strategic and International Studies and a former Clinton administration trade official.

It's not difficult to move. Set up the game and play it again. "The rules are designed in such a way that the U.S. usually falls behind."

According to SPV Market Research, China is responsible for 80% of all solar shipments in the world, with the remainder coming from its other export hubs in Asia. This is a stark contrast from two decades ago, when the U.S. led the world in this industry.

According to federal data, the United States' imports of solar products have tripled in size since Washington began imposing tariffs on them in 2012. They reached a record high of $15 billion last fiscal year. In 2023, almost no solar supplies came from China, but 80% of them came from Vietnam.

Washington imposed tariffs on solar imports from these four Southeast Asian nations last year, and increased them in October after complaints by manufacturers in the United States.

In the past 18 months, four Chinese-linked projects in Indonesia and Laos have started operations, and two more have been announced. The projects have a combined capacity of 22.9 gigawatts in solar cells or panels.

The United States is the second largest solar market in the world after China, and it's also the most profitable. According to PVinsights, U.S. prices were on average 40% higher in the last four years than those of China.

In trade complaints filed with the U.S. Government, U.S. Solar producers have stated repeatedly that they cannot compete with Chinese products which they claim are supported unfairly by the Chinese government as well as the Asian countries that export them.

Chinese solar firms counter that they are more competitive in price because of their technology mastery.

The U.S. presidential election is dominated by tariffs. Former Republican President Donald Trump has proposed levies of up to 60% on goods imported from China in order to boost U.S. manufacturing. Trump's rival, Democrat vice president Kamala Harris, has claimed that Trump's plan will increase costs for U.S. customers.

Both sides of the aisle have supported higher tariffs for China's solar exports to encourage a domestic supply network.

John Moolenaar of the House Select Committee on China said that the American public must demand a stricter enforcement of tariffs in the future, particularly when it comes to China's use of third-country countries to violate U.S. law.

Requests for comments from the U.S. Department of Commerce and White House, as well as China's Commerce Ministry, were not answered.

Pain in Viet Nam

Solar power in Vietnam has seen the most visible impact from recent U.S. Tariffs.

In August, I visited industrial parks in north Vietnam, owned by Chinese companies, including Longi Solar and Trina Solar. I spoke to workers.

Two employees who are familiar with the situation said that in Bac Giang province hundreds of workers lost their jobs at a large complex of factories owned by Longi Green Energy Technology Vinasolar.

One of the workers said that only one out of nine production lines was being used by the company in this industrial park.

Two employees in Thai Nguyen province said that Trina Solar had shut down one of its two solar cell and panel factories.

Due to the sensitive nature of the matter, the employees of both companies refused to be named.

Longi has not responded to any requests for comments. It stated in June that it had suspended production at a Vietnamese plant for solar cells, but provided no details. Trina refused to comment. In June, it announced that certain facilities in Vietnam and Thailand will be closed for maintenance.

Analysts in the industry have attributed this increase to the fact that Vietnam has been accelerating exports ahead of the U.S. tariffs for the year.

The government of Vietnam did not respond when asked for comment.

NEW EXPORT BASES, US PLANTS

Beny Adi Purwanto, an official in the Indonesian Industry Ministry, cited Thornova Solar to illustrate how Chinese solar companies are flocking towards Indonesia due to tariffs against Vietnam. Thornova claims on its website that its Indonesian facility has the capacity to produce 2.5 GW solar modules annually and 2.5 GW solar cells for North American markets.

Beny said that a new Trina cell and module plant of 1 GW will be operational by the end of 2024, and expand capacity. Beny cited the 2.4 GW solar module production capacity of China Lesso Group.

Last year, New East Solar, a Chinese company with ties to Indonesia, announced the construction of a 3.5-gigawatt panel and cell factory in Indonesia.

Requests for comments from Chinese companies were not answered.

According to a manager of a U.S.-based solar company, the shift from Chinese production to Indonesian has been swift and sharp. Their Chinese supplier in Indonesia told them that they were inundated by large orders from Chinese firms seeking to export to America.

The manager, who refused to be named, said: "The scales are totally different."

According to data from the federal government, solar exports to the U.S. will nearly double to $246 millions by August 2024.

Imperial Star Solar is one of the solar companies looking for greener pastures. Imperial Star Solar, a firm with Chinese roots, but which produces most of its products in Cambodia, has opened a Laos-based wafer factory in March, slated to have a 4 GW capacity.

In a press release at the time it claimed that this move helped it avoid U.S. Tariffs.

SolarSpace opened a 5GW solar cell factory in Laos, in September 2023. In a statement, the company stated that it was not about U.S. Tariffs.

Solar exports were virtually nonexistent during the first eight-month period of the previous year, but are expected to reach $48 million by August 2024.

Some go further.

JinkoSolar announced in July that it had signed a nearly $1 billion deal with Saudi Arabian partners to build a 10 GW new solar cell and modules plant in the Kingdom.

Chinese companies are also constructing solar manufacturing plants in the U.S. as they seek to benefit from U.S. incentives.

According to an analysis, Chinese companies will be able to produce at least 20 GW of solar panels annually on U.S. land within the next 12 months, which is enough to cover about half of the U.S. marketplace.

(source: Reuters)