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The Challenges of China Solar Industry in The First Half of 2023
(I) India's escalating friction with my country's photovoltaic industry
In recent years, the Indian government has vigorously supported the rapid development of its local photovoltaic manufacturing industry. Its goal is not only to get rid of its dependence on my country's supply chain, but also to strive to become a global photovoltaic manufacturing power.
Our country's photovoltaic production equipment has leading technology and cost advantages. Currently, more than 80% of India's photovoltaic manufacturing equipment is imported from my country. In addition, Indian photovoltaic companies also recruit technical personnel from my country's overseas production bases with high salaries, attempting to achieve rapid replacement of China's photovoltaic manufacturing through "Chinese equipment + Chinese talents".
At the same time, India's relevant policies have put my country's photovoltaic companies in an unfair competitive environment. On the one hand, they restrict the import of photovoltaic products from my country, and on the other hand, they step up the import of my country's photovoltaic equipment to achieve their own production capacity and strengthen competition with my country. Western countries such as the United States and Europe, which currently set up trade barriers for my country's photovoltaics, also support India's development of photovoltaic manufacturing to replace my country's products on a global scale.
(II) my country's photovoltaic enterprises still face multiple problems in developing the US market
1. Domestic photovoltaic trade in the United States in recent years
In the first five months of 2023, my country's exports of battery products to the United States were US$1.157 million, accounting for 0.057% of the total exports, an increase of 16.3% year-on-year. The export value of photovoltaic module products to the United States was US$4.707 million, accounting for 0.024% of the total exports, an increase of 88% year-on-year. It is worth noting that the United States has significantly reduced its imports of battery cells from both my country and India. From 2020 to 2022, my country's exports of battery cells to the United States were US$36.1 million, US$1.08 million and US$1.01 million respectively. In 2020 and 2021, India's exports of battery cells to the United States were US$6.99 million and US$80,000 respectively, and there was no export to the United States in 2022.
From 2020 to 2022, my country's exports of photovoltaic modules to the United States decreased year by year, with export values of US$290 million, US$30 million and US$30 million respectively. In contrast, India exported PV modules to the United States worth $24 million in 2020, $20 million in 2021, and $244 million in 2022, an increase of 1,120%.
2. The United States imposes restrictions on my country's PV products through 301 tariffs, the Uyghur Forced Labor Prevention Act, and other means
In July 2018, the Office of the United States Trade Representative (USTR) launched a 301 investigation, imposing an additional 10% tariff on up to $200 billion of Chinese goods, including PV inverters. Starting in 2021, the United States pointed the finger at my country's Xinjiang PV production companies under the guise of the so-called "forced labor" issue, and signed the UFLPA Act into law on December 23, 2021. On June 21, 2022, the "rebuttable presumption" in the Xinjiang-related Act officially came into effect, requiring that goods imported and declared after June 21, 2022 must provide silicon ore-related origin, procurement and transportation traceability information. In August 2022, some media reported that since the promulgation of the Xinjiang-related bill in the United States, the U.S. Customs has detained a large number of solar photovoltaic modules. Domestic key photovoltaic manufacturers such as Longi, Trina, Jinko, and JA Solar have all been affected. In addition, the situation of export goods being stranded in U.S. ports has continued to intensify, storage costs have risen sharply, and upstream and downstream, supply and demand companies in China and the United States have suffered serious damage.
(III) The overseas layout strategy of my country's photovoltaic enterprises still needs to be optimized and adjusted
As the globalization layout of my country's photovoltaic enterprises accelerates, in addition to directly exporting photovoltaic modules, some Chinese companies have established production bases in Southeast Asia, optimizing the export structure of my country's photovoltaic products.
These manufacturing bases radiate the Southeast Asian market and export to Europe and the United States. In March 2022, the U.S. Department of Commerce launched an anti-circumvention investigation on photovoltaic products from Vietnam, Malaysia, Thailand and Cambodia; three months later, the U.S. government granted a 24-month tariff exemption for solar photovoltaic modules purchased from Cambodia, Malaysia, Thailand and Vietnam. According to the preliminary ruling, after the two-year exemption period, exporters need to sign a "declaration" for tax exemption, and there is uncertainty as to whether the exporter's photovoltaic modules can be applied to the "declaration".
The final ruling was released on August 18, 2023. The U.S. Department of Commerce announced the final ruling of the anti-circumvention investigation against China's anti-dumping and anti-subsidy measures for photovoltaic products, and determined that the four investigated countries, Thailand, Cambodia, Vietnam and Malaysia, have circumvention nationwide. Among the eight companies that were forced to respond to the anti-circumvention investigation, five companies, BYD Hong Kong, Canadian Solar, Trina Solar, LONGi Solar (Vina Solar) and New East Solar, were temporarily identified as having circumvention behavior. The limited exemption policy does not really eliminate the risk. Accelerating the overseas production capacity layout of silicon wafers and auxiliary materials is an important measure to deal with anti-circumvention investigations.
