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From solar to EVs: With China's overproduction and state subsidies, the US and EU are working to ensure that their clean-energy sectors aren't wiped out by unfair competition

www.dw.com From solar to EVs: How China is overproducing green tech – DW – 04/10/2024

China faces more scrutiny from the West over its aggressive export practices — overcapacity and huge subsidies. The US and EU are working to ensure that their clean-energy sectors aren't wiped out by unfair competition.

From solar to EVs: How China is overproducing green tech – DW – 04/10/2024

Beijing's industrial subsidies are on average three to four times higher than in Organisation for Economic Co-operation and Development (OECD) countries — sometimes up to nine times as much. A report published this week by IfW-Kiel estimated that industrial subsidies amounted to €221 billion or 1.73% of China's gross domestic product in 2019. Another study put annual subsidies typically at around 5% of GDP.

The IfW-Kiel report revealed how Chinese subsidies for domestic green-tech firms had increased significantly in 2022. The world's largest EV maker, BYD, received €2.1 billion, compared with €220 million just two years earlier. Support for wind turbine maker Mingyang rose from €20 million to €52 million.

Europe's green-energy sector has already taken a beating from cheap Chinese imports of solar panels, which have wiped out several domestic players and prompted an EU anti-subsidy probe. Though EU countries installed record levels of solar capacity last year — 40% more than in 2022 — the vast majority of panels and parts came from China, according to data from the International Energy Agency.

Analysts argue that China can't succeed without strong and stable markets for its products, which should give US and EU leaders the edge in negotiations with Beijing.

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  • My general/summarized thoughts:

    At the end of the day, if we do protectionism and bar China, I can only hope we do enact more subsidies, close if not on par with China, for our own industries so that we accelerate our transition to green energy. I don't really personally care if we ban Chinese products, I just think this is a bit of cope about someone who's just... doing better economic policies, that we should also be doing, instead of crying about "unfair market competition" as if free market absolutism is necessarily good (China isn't doing enough "free market" so they're "unfair", even though we're doing the same to a slightly lesser degree).

    My personal preference would be doing what Norway is doing: setting up democratic state run organizations that do green tech so that we socialize the profits we do make from such an industry. That's Norway's approach to hydropower, where they own the vast majority of it, and they're ramping up efforts towards wind energy too. They also have a state oil industry, but obviously I'm not too happy about that in the context of climate change - however, it has been incredibly economically beneficial for the people of Norway, so we should likely copy their strategy for green tech.

    Responding to specific paragraphs:

    During a trip to China, Yellen said the country's unfair trade practices — dumping artificially cheap products on global markets — were a threat to US businesses and jobs. Washington is considering imposing higher tariffs and closing trade loopholes if Beijing maintains its existing policy.

    "Artificially cheap" is basically a loaded term for "subsidized". We do the same thing for certain industries here in Europe, there's really nothing special about it. In fact, we should probably be doing more subsidies.

    "Chinese subsidies are pervasive," Rolf Langhammer, former vice president of the Kiel Institute for the World Economy (IfW-Kiel), told DW. "They encompass almost all industries and are far larger than any EU or US subsidies."

    Maybe we should increase our own subsidies instead? I really don't see the argument here - would we transition to a green economy too fast when climate change is a crisis in waiting? Why are cheap products a problem all of a sudden, I thought that was the primary reason we started using China to mass produce stuff on our behalf, i.e. we took advantage of their horrible working conditions that we know led to suicides and anti-jump fences. But now all of a sudden cheap stuff is a problem?

    In addition to the huge subsidies, the report's authors noted, Chinese producers also benefit from preferential access to critical raw materials, forced technological transfers and less domestic red tape than their foreign competitors.

    All of these sound like good things we should be doing. In fact, we are doing a little bit more of transparency (which is what "forced tech transfers" are, in less loaded terms - it's literally just making corporations share knowledge and cooperate) e.g. supply chain transparency in Europe is growing. Less domestic red tape sounds like a good thing? Norway has a similar "problem" of a government being a little bit too efficient. Obviously that's not a bad thing - maybe we should figure out why we're comparatively slow?

    Langhammer noted that the West also benefits from the Chinese subsidies, as consumers can buy cars at a lower price while companies can access cheaper Chinese parts. Despite the threat from cheaper Chinese EVs, he said, some automakers were skeptical about the EU probe into Beijing's subsidies as firms such as Germany's Volkswagen and US EV leader Tesla receive them, too.

    As in, Tesla has received Chinese subsidies. It has also received US and (I believe) EU subsidies too. And I'm talking about supply side subsidies, demand side subsidies like governments paying part of the price of EV cars have provided tens of billions in plenty of EU and EEA countries.

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