Author accepted manuscript (2015)

Citation:

Caprotti, F. (2015) Golden Sun, green economy: market security and the US/EU-

China ‘solar trade war’. Asian Geographer 32(2): 99-115.

Golden Sun, Green Economy: Market Security and the US/EU-China ‘Solar

Trade War’

Abstract

China’s solar manufacturing and R&D industry has developed rapidly since 2000:

by 2010, 40% of the world’s solar panels were manufactured in China. This has

occurred as a result of strategic government economic planning, which has

included concerns about energy security, energy diversity, and about the

stimulation of a renewables-based green economy. The growth of China’s solar

industry has been marked since 2011 by what has come to be termed a ‘Solar

Trade War’ between the EU, the US and China. The paper analyses the

heterogeneous framing of China’s solar energy industry by corporate, non-

governmental and government actors in the US and EU. In so doing, the paper

aims to critically investigate the production of specific market knowledge(s) that

are not only instrumental and rational, but based on often-contradictory

discursive constructions of an apparently merely technological and economic

phenomenon such as the production of solar modules.

1

Golden Sun, Green Economy: Market Security and the US/EU-China ‘Solar

Trade War’

Introduction

China’s solar industry has developed rapidly since 2006, as a result of

government strategies aimed at diversifying the country’s energy generation

landscape and increasing China’s energy security whilst promoting the

development of a national green economy by focusing on high-tech, value-added

sectors (Mathews and Tan 2014). In turn, the Chinese government’s support for

the development of national renewable energy industries can be seen as part and

parcel of a geopolitical and geo-economic strategic attempt to gain dominance in

industrial markets that are central to contemporary and future concerns over

energy security.1 The paper focuses on how the rapid development of China’s

solar industry was framed by networks of discursive actors in the European

Union (EU) and in the United States (US), the two main markets affected by

competition from Chinese solar technology imports. The following centres on the

case of the ‘Solar Trade War’ which broke out between the US, the EU, and China

in 2011 and which is on-going at the time of writing. The trade war is a useful

moment through which the performance of the Chinese solar industry by a

network of actors in the US and EU can be analysed. In so doing, the paper

investigates the cultural economy around the ways in which economic sectors

are framed by actors with a stake in specific representations of a particular

sector. Specifically, the following focuses on the deployment of discourses of

2

market security to frame the Chinese solar industry in ways that highlight

tensions around the relationship between firms and the state.

The rapid development of China’s economy in the post-Mao era of economic and

industrial liberalization has necessitated the installation of increased power

generation capacity. In the Chinese context, capacity development is

characterised by a multi-scalar set of strategic initiatives. These are often

described as strategic responses to a series of economic, environmental and

other concerns, including: the need to continue powering China’s high GDP

growth level; enabling the growth of a rapidly expanding consumer economy,

linked in no small part to an emergent consumerist middle class, while

maintaining the legitimacy of the Chinese Communist Party; a need for increased

energy source diversification; and a strategic focus on energy security. These are

important issues, most of which lie outside the scope of this paper (but see

Leung 2011; Yeh and Lewis 2004; Zhang 2012). Nonetheless, China’s year-on-

year economic development has necessitated a parallel shift in the organization,

efficiency and capital investment in energy required to enable continued growth.

Concerns about the diversification of sources of generation capacity, and about

the need for energy supply resilience through greater energy security, have

paralleled the Chinese government’s recognition of the country’s energy industry

as a key enabler of growth and progress.

3

The general outlines of China’s rapid economic growth are well known, but it is

useful here to briefly link them to the parallel rise in the country’s energy

demand. Although it has since slowed, in 2000-10, China’s GDP grew at a rate of

over 8% per annum (p.a.) in real terms, with a high of 14.2% in 2007, and a low

of 8.3% in 2001 (World Bank 2012). Taking a more extended temporal view, the

average annual GDP growth rate over the period 1979-2008 was around 10%

(Liu 2009). Underlying this rapid pace of economic growth, over the same time

period primary energy consumption increased by 340% (Zhang and Cheng

2009). This was paralleled by significant increases in generation capacity to meet

increasing consumption demand: in 2000-10, China’s generation capacity grew

at an average annual rate of 11.84% (Nan & Moseley 2011), and total installed

capacity doubled in 2003-2008, from 380 to 793 gigawatts (GW) (Wang and

Chen 2010). In 2009 alone, the country added more than 90 GW of new

generation capacity: this is more than the total current installed capacity in the

United Kingdom. Even accounting for the rapid rise in hydroelectric power

generation, most of the growth in generation has been fossil fuel-powered,

showing a veritable ‘addiction to coal’ (Wang and Chen 2010, 1016).2 By 2010,

76.5% of China’s energy was produced by coal. In contrast, hydroelectric power,

wind power and nuclear power combined generated approximately 9.4%

(National Bureau of Statistics of China 2011). By 2010, China had become the

world’s largest producer and consumer of energy (BP 2014).

China’s current reliance on coal belies a significant focus on developing

renewable energy sources, both from a generation capacity perspective and also

4

in terms of renewable energy policy, research and development (R&D),

manufacturing, and grid access (Lo 2014). The period since 2006, in particular,

has seen: the strategic augmentation of wind and solar power; a focus on

improving energy efficiency across industrial sectors (and in terms of

transmission and generation); and the identification of renewable energy

sources as key enablers for transition towards a future, decarbonised economy

(Li 2010). By the end of the 2000s, for example, China had become the world’s

largest wind power market (Li et al., 2010); by 2013 it had become the largest

global solar photovoltaic (PV) market for new installations (EPIA 2014).

Corporate, governmental and other actors from a wide variety of national and

economic contexts have prominently celebrated China’s focus on renewable

energy. In a US Congress address in February 2009, president Barack Obama

identified energy as the first of three key themes to focus on in securing the US’

economic future. And yet, it is telling that his first remarks on the topic of energy

focused not on the US, but on China: he lauded China’s record on green energy,

stating that:

‘We know the country that harnesses the power of clean, renewable energy will lead the 21st

century. And yet, it is China that has launched the largest effort in history to make their economy

energy efficient’ (Obama 2009).

5

This positive tone can be found across much of the political and academic focus

on China’s green energy strategies. For example, in comparing South Korea and

China’s industrial and economic strategies for transitioning to a ‘greener’

economic landscape, Mathews (2012, 1) stated that ‘China is now actively

creating a new pattern of growth, based on lower levels of resource intensity,

greater reliance on renewable energies, an explicit commitment to the circular

economy and pricing of inputs to reflect their ecological significance’. However,

by the early 2010s, China’s increasingly important role in the global renewable

energy market started to be constructed in a range of more complex ways. Some

of these were negative, focusing on identifying and framing specific fears around

Chinese efforts to incentivize renewable energy. These framings of China’s

renewable energy sector highlight the role of energy as a mediator and interface

between national sustainability strategies and global economic and geopolitical

processes (Fischhendler et al., 2015, Waisman et al., 2014). China’s solar

manufacturing and R&D industry has been central to these debates. The paper

focuses on this juncture, between complex and at times contrasting

representations of China’s solar industry.

The following analyses the framing of China’s solar energy industry by corporate,

non-governmental and government actors in the US and EU, and the

heterogeneous and at times contradictory sectoral identities produced about the

Chinese solar industry by these often overlapping and unstable actor-networks.

In so doing, the paper critically investigates the production of specific market

knowledge(s) that are not only instrumental and rational, but based on often-

6

contradictory discursive constructions of an apparently simply technological-

economic phenomenon such as the production of solar modules. The analysis in

this paper is rooted in work that understands markets (such as energy markets)

and their emergence as not simply technically ‘economic’ (Mitchell, 2005), but as

determined by complex, performative and relational webs of actor-networks,

materialities and power relations (Berndt and Boeckler, 2010; Callon, 2007; Hall,

2012). Research along these lines has focused on the social and cultural

construction of a range of economic sectors, from management consulting (David

et al., 2013), to nanotechnology (Granqvist et al., 2013). The role of performance,

relationality and of the discursive interactions of actors in producing specific

outcomes and materialities has also been examined with regards to the

emergence of specific products, as seen in Garud’s (2008) analysis of the

importance of conferences as a vehicle through which new products such as

cochlear implants emerge. In this vein, recent studies have identified the ways in

which the green economy and its constituent sectors, such as carbon markets

and renewable energies, are likewise performed entities and not simply

technical constructs based on instrumental rationality (Knox-Hayes, 2010;

Lansing, 2012). Therefore, an analytical approach sensitive to the ways in which

the geographies of techno-scientific knowledge(s) are constructed and

performed thus becomes key to understanding not simply the framing of

environmental and energy conflicts, but also the creation of actually existing

geopolitical energy landscapes which result from energy markets’ constructed,

relational and performed nature (Calvert 2015; Geoghegan and Leyson 2012;

Jones 2014).

7

The paper adopts a methodological and analytical framework informed by

Critical Discourse Analysis (CDA) (Fairclough 2003), in which text and language

is seen as a form of social practice. The paper’s analysis focuses on textual

materials (for example, reports and press releases) produced by the categories of

actors mentioned above, in order to engage with, and excavate, narratives

produced by these actors (Hewitt 2009). Although the paper does not draw on

interviews due to the large number of actors and market geographies involved,

and the resultant budgetary research constraints, it acknowledges the fact that in

future research, deploying a limited number of ‘helicopter interviews’ (Hajer

1996) would be useful. Nonetheless, the paper’s approach, focusing on

documents and reports, draws on similar work carried out in critical studies of

policy, and has been particularly useful in critically engaging with discursive

practices in an intercultural setting (Agustín 2012).

Constructing a cultural economy of China’s solar industry

The following investigates the interplay of several sets of discourses that have

coalesced around the development of China’s solar industry in 2006-2012.

Environmental discourses can be seen as mechanisms of ‘meaning-making’

through which assemblages of particular phenomena (such as markets or

sectors) are made sense of (Backer 2009; Onestini 2012). At the same time,

discursive processes of meaning-making can be seen as part and parcel of

selective strategies of representation: this is where power relations enter the

8

fold, as meanings are defined by networks of actors with stakes in making sense

of a socio-technical assemblage in specific ways. It is in this light that discourse

can be seen as ‘framing’ particular assemblages: they ‘distinguish some aspects

of a situation rather than others’ (Hajer 1995, 45). Indeed, the various ways in

which actors both within and outside China (and those working across its

borders) perform the solar industry and relate to each other can be seen as a key

component of the process of marketization (Caliskan and Callon 2010). As

Berndt and Boeckler have argued, this involves:

‘the configuration of markets as an ambivalent play of framings […] and overflows (ie irritations,

disjunctures, and paradoxes which surface when heterogeneous actors practically enact the

model). The economic entities (markets, firms, commodity chains, etc) which emerge in this

double process only ever acquire temporary stability’ (Berndt and Boeckler 2011, 1058).

In the case of the emergence of China’s solar industry, the paper analyses the

discursive construction of the industry by non-Chinese actors (firms, policy

executives, and others) in the US and the EU. These discursive actors are

intimately involved in framing, and performing, China’s solar sector outside the

country’s borders. The following focuses on the ways in which China’s solar

industry was performed and framed through recourse to discourses of market

security. These discourses constitute a discursive arena which performs China’s

solar industry as a government-backed sector, constituting a threat to ‘free trade’

in terms of trade relations and perceived market imbalances.

9

Analyses of the role of environmental discourse in the construction of

materialities have tried to understand the mechanisms through which discourses

operate and come to frame specific issues (Jerneck 2014). In a study of the

strategies of discursive framing of the societal impacts of climate change by US

science policy, Miller (2000) identifies narration, modelling, canonization and

normalization as processes through which framing occurs. To this can be added

to the process of framing through rationalization (Backer and Clark 2008). For

example, the recent ‘Green New Deal’ set of incentives for green industries

publicised by various states, from the USA to South Korea, has been critiqued and

shown to be based on ecologically modernizing discourses which did little to

shine light on the interactions between economic crisis and environmental policy

(Feindt and Cowell 2010). In this light, the selective backing of certain sectors or

industries (such as the solar manufacturing industry) can be seen as an example

of a neoliberal approach to economic-environmental crisis which alights upon a

choice industry (in this case, the solar industry) that is then constructed through

an ecologically modernizing lens as the solution not only to economic crisis and

unemployment, but to wider geopolitical issues, such as energy security.

An aspect of the discursive construction of the Chinese solar industry that must

be acknowledged is the North-South (and East-West) aspect of the framing of a

rising industrial sector in the context of a rapidly developing country (Nickum

1999). In light of the paper’s analysis of a trade war between the US, the EU and

China, awareness of this aspect is crucial in allowing for critical analysis.

Furthermore, it is important to remain aware of the potentially colonial aspects

10

of the narratives deployed to describe and construct elements of social life

outside the Global North (Escobar 1995). In the case of framings of the rise of the

solar industry in China, this is particularly relevant because specific framings by

non-Chinese actors could be seen as constituting what Mohanty (1988) terms a

‘colonialist move’, whereby discourse is produced under conditions of unequal

relations of power. In the case of China’s solar sector, such unequal relations of

power could be seen in discourses produced by Western media, and in the side-

lining of discourses of resistance or opposition to negative framings of the

industry. In this sense, therefore, discursive construction of the Chinese solar

sector allows non-Chinese actors ‘the exercise of power over it’ (Escobar 1995,

9). While a comprehensive, critical analysis of this aspect of discourses around

the emergence of the Chinese solar industry lies outside the scope of this paper,

it is nevertheless noted here as a potential factor influencing specific discursive

framings.

The development of China’s solar energy industry, 2006-2010

The emergence of China’s solar industry has been enabled by its designation, in

the Chinese government’s energy policy, as a strategic development target. Even

then, its quick rise, in China and abroad, has been described as rapid and

unpredictable (Jean et al., 2015). Although the take-off moment for China’s solar

energy industry was in 2006, it should be noted that the country started

producing PV cells in 1973, and that the solar thermal market was well-

established by 2000: indeed, by 2002, 10 million square metres of solar thermal

applications had been installed countrywide (Zhiqiang 2005). The solar PV

11

market had started developing before the 2006 watershed year. PV production

had started rising in the early 20002, albeit from a minimal base. In 2003-06, for

example, the yield of solar PV in China increased from 12MW to 400MW (Liu et

al., 2010). By 2007, this had risen to over 1,200MW.

Zhang et al. (2014) have identified four main stages in the development of

China’s solar PV industry. In the first stage, from the mid-1990s to circa 2003,

the government supported rural electrification policies. While this increased

domestic cumulative PV capacity, overall PV capacity was still minimal by 2003.

Furthermore, while key corporate players were founded during this time, such

as Trina Solar and Yingli, Chinese solar PV firms were yet to enter the global

market in a significant way (Ibid.). The second stage, between 2004 and 2008,

saw the enactment of government strategies aimed at aiding PV industries by

incentivising exports. Up to and including the initial stages of the 2008 global

financial crisis, China’s support for renewables was motivated by a strategic

desire to develop a key national industrial sector while increasing energy

security (Hallegatte et al., 2013). At this time, the world’s largest solar market

was the EU, so the Chinese state focused on supply-side supporting strategies,

including direct subsidies aimed at galvanizing exports. This had the effect of

helping to promote domestic manufacturing: as Goodrich et al. (2013) have

shown, while over 90% of manufacturing capacity for PV firms with operations

or headquarters in the US is abroad, in the case of China, 99% of manufacturing

capacity for Chinese solar corporations resides within China.

12

When the EU solar market suffered as a result of the 2008 crisis, the Chinese

solar PV industry entered its third stage of development (Zhang et al., 2014).

Government support for solar PV shifted to enhancing domestic demand through

domestic (national at first, then regional) feed-in tariffs and grid-integration

incentives (Hallegatte et al., 2013). This included domestic subsidy programmes

such as the Golden Roofs and other rooftop installation subsidies. Goodrich et al.

(2013) have shown than government support for solar PV in China in turn

enabled a competitive advantage for Chinese PV corporations in terms both of

scale and supply chain advantages: for example, while in 2013 the average PV

manufacturing plant in the US had a production capacity of 500MW, in China the

average PV manufacturing plant had a capacity of 2,000 MW (Ibid.).

Furthermore, Goodrich et al. (2013) have demonstrated that the advantages of

low-cost labour in Chinese solar PV manufacturing are more than offset by other

factors, such as high inflation and country-specific risks. This highlights the

importance of scale and supply chain advantages in the emergence of China’s

solar PV manufacturing industry.

The support strategies highlighted above meant that by 2012, the Chinese solar

PV industry had entered a phase of high over-capacity: by 2012, China was

producing 150% of the world’s PV annual demand (Zhang et al., 2014). Zhang et

al. (2014) argue that this marked the beginning of the fourth stage in the

development of the industry. This stage is characterised by a period of policy

adjustments (such as support for Distributed Solar PV, or DPV) aimed at

13

redressing the over-capacity issue, and its transnational effects, such as the

‘trade war’ analysed in this paper.

While China’s PV manufacturing capabilities have benefited greatly from scale

and supply chain advantages, it is key to recognise the fact that government

support was, at the very least, an enabler of the emergence of these advantages

(Goodrich et al., 2013). Investment in clean energy technologies became a stated

priority in China’s eleventh Five-Year Plan (FYP) (2006-10), which called for

renewable energy targets that were more ambitious and wide-ranging than

those found in the previous FYP (2001-05) (NREL 2004). The eleventh FYP

called for direct government support for solar, wind, bio and nuclear energy,

including the investment of RMB 2 trillion (US$ 309 billion) on energy efficiency

and environmental protection (Casey and Koleski 2011). In addition to this

support, in 2010 the State Council legislated to accelerate the support of the

development of seven key strategic emerging industries (Livingston and

Friedman 2012). These included new energies, energy technologies and clean

energy vehicles (State Council 10 October 2010).3 The solar industry was one of

the targets for accelerated development. By 2006, 38% of the world’s installed

solar capacity was located in China (Philibert 2006): the country was identified

as possessing the largest realisable PV installation potential globally to 2020,

with 111 terawatt-hours (TWh) of realisable PV generation capacity (IEA 2008).4

The 2006-10 FYP kick-started China’s solar development: in 2006-07, the

country’s PV yield increased from 400MW to 1,200MW, and then to 2,000MW in

2008 (Liu et al., 2010).

14

The twelfth FYP (2011-15) was ambitious in terms of renewable energy targets.

The new plan incorporated the State Council’s 2010 decision to focus on key

industries: a significant proportion of the Plan’s renewables focus was placed on

solar energy. The 2011-15 FYP called for a focus on new-generation PV and

photo-thermal solar generation, to include new developments in solar cell

efficiency as well as the retention of intellectual property rights over new

technology developments (Livingston and Friedman 2012). Overall, the FYP

called for an increase of 5 GW in solar installed capacity in the country, with a

2020 target of 20 GW of domestic installed solar capacity and a geographical

focus on Tibet, Inner Mongolia, Gansu, Ningxia, Qinghai, Xinjiang and Yunnan

provinces (Campbell 2011).

The Chinese government’s target is significant when considering that as late as

2009, the Organisation for Economic Cooperation and Development (OECD) and

the International Energy Agency (IEA) estimated that by 2020 China’s total

installed capacity would only reach a maximum of 1.6 GW of installed capacity

(OECD/IEA 2009). By 2011, IEA analysts had drastically revised this estimate,

stating that China’s solar installations for 2011-20 were now expected to amount

to 2 GW of additional capacity every year (Cheung 2011). These estimates seem

especially ambitious when considering the fact that by 2011, China’s actual

installed solar capacity was only 0.6 GW, a small amount compared to the top

two installers in 2010: Germany (7.4 GW) and Italy (2.3 GW) (REN21 2011).5 By

the end of 2014, China’s installed PV capacity was of 28.05 GW (Shaw 2015),

15

thus outstripping even the 2011-15 FYP’s 2020 target of 20GW of installed solar

capacity. Nonetheless, the projected growth rate of installations was a significant

pointer to the year-on-year ramping up of installed solar capacity over the

course of the new FYP (KPMG 2011). Crucially, the twelfth FYP also prompted

China’s solar firms to develop their already significant international market

presence. For example, the FYP assigned US$ 100 million to finance solar power

projects planned by Chinese solar firms in 40 African countries (Casey and

Koleski 2011).

In addition to the twelfth FYP, the Chinese government produced a plan

specifically for the solar industry. Published on 24 February 2012 and known as

the 12th Five Year Plan for the Solar Photovoltaic Industry, it contained several

targets aimed at making China’s leadership in the solar industry a reality by

2020. Targets included the lowering of the average cost of PV modules and the

promotion of flagship solar enterprises. Furthermore, one of the plan’s aims was:

‘to ensure that at least one PV solar company surpasses annual sales revenue of RMB 100 billion;

that three to five PV companies surpass sales revenue of RMB 50 billion; and that three to four PV

special equipment enterprises surpass annual sales revenue of RMB 1 billion’ (Livingston and

Friedman 2012, 20).

China’s solar industry has been subsidised by central government agencies and

departments as well as through incentives developed by provincial governments.

As part of the eleventh FYP, in 2007 the Chinese government’s National

16

Development and Reform Commission (NDRC) released the Medium and Long

Term Development Plan for Renewable Energy (MLTDPRE) (UKTI 2008).

Although the document initially called for a solar target of 1.8 GW of installed

capacity by 2020, this was revised upwards to its current 20 GW target. Key

incentives included the Golden Roofs programme (Ministry of Finance and

Ministry of Housing and Urban-Rural Development 2009)6. Instituted in 2009, it

provided a subsidy of US $2.93 per watt from rooftop solar PV installations over

50kW.7 The subsidy was important, since its pricing had the potential to reduce

installation costs by up to 50%. Coupled with a feed-in tariff of US$ 0.16 per

kilowatt-hour (kWh) for grid-connected solar systems, significant support was

generated for the PV industry through incentivising installation and connection

to the grid (Campbell 2011). A second set of incentives, known as the Golden Sun

programme, was set up jointly by China’s Ministry of Science and Technology

(MOST), the National Energy Bureau (NEB) of the NDRC, and the MOF (MOST,

NEB and MOF 2009). Golden Sun was aimed at supporting large-scale projects of

more than 300-kilowatt peak (kWp) capacity, constructed in less than a year and

targeted at operational timespans of over 20 years. The overall aim was the

installation of 500 MW of solar capacity by 2012 (O’Brien 2012). Golden Sun

provided for a subsidy of 50% on installation and grid-connection costs,

increasing to 70% in remote areas. Both Golden Sun and Golden Roofs were

consumption subsidy programmes. They were also developed from 2009, and

cannot be considered the chief motivators of the rise of solar PV manufacturing

in China (Goodrich et al., 2013). Nonetheless, they have formed a large part of the

policy initiative aimed at continued support of the domestic PV industry into the

2010s.

17

The amount of capital invested by government in the solar industry as a result of

these subsidy and incentive programmes was significant. For example, by

September 2011, the Chinese Development Bank had made available over US$ 29

billion in loans to the top five Chinese solar manufacturers (DOE 2012b).8 The

overall result was that while in 2005 Chinese firms produced less than 10% of

the world’s PV products, by 2010 their market share had increased to over 50%

(IEA 2008). When considering the fact that in 2005-10 the domestic Chinese

market demand for PV remained at less than 10% of global demand, it can be

seen that Chinese-produced PV products were aimed primarily at the export

market. By 2010, in fact, 95% of China’s PV production was export-focused

(APCO Worldwide 2010). The relative lack of demand for domestic PV products

within China itself is generally described as a market asymmetry, with the

domestic market unable to absorb domestically produced PV products due to the

fact that solar manufacturing far outstripped the demand for domestic

installations, although this picture is changing as the 2010s wear on (Chen

2014).

The development of China’s solar industry connected Chinese solar corporations

with the international solar market (Gress 2015). This can be seen by the fact

that Chinese PV firms have been increasingly visible participants at international

solar industry trade shows (Gress 2015; Marigo 2007). The net result is that by

the end of the 2000s, Chinese firms came into direct competition with solar

technologies produced by Western firms such as Solyndra, a US-based tubular

18

array manufacturer declared bankrupt in 2011 after receiving a high-profile US$

535 million federal loan (Neilson 2012). The next section explores the

construction and performance of the Chinese solar industry in the context of

rapid sectoral emergence and global impact.

Constructing China’s solar role: the US/EU-China ‘solar trade war’

International institutions were quick to praise China’s renewable energy

subsidies as forward thinking. In a joint statement by China’s National Energy

Administration (NEA) and the International Energy Agency (IEA) in 2009,

China’s renewables subsidies were praised not only as ‘addressing the

environmental impacts of energy production and use’ but also ‘improving global

energy security’, and the subsidies were celebrated as promoting ‘China’s

socioeconomic and sustainable-energy development objectives, including many

that yield co-benefits for addressing climate change effectively’ (NEA/IEA 2009,

1). Although there were some critiques of China’s claims on the subject of

decarbonisation (Lin 2010), government involvement in the domestic renewable

energy market was often constructed as positive. For example, studies of the

efficacy of renewables policies in a range of national settings (Yi 2014) argued

that the adoption of renewables necessitates state support, as underlined by the

Chinese case. However, the strong level of government backing for China’s solar

industry, and the subsequent rise in solar exports eventually caused friction

abroad as non-Chinese firms lost part of their domestic and international solar

market share. The significant impact of the entry of Chinese solar firms on the

global solar market, and on incumbent corporations in the US and EU solar

19

markets, elicited discursive responses and framings aimed at depicting Chinese

solar firms, and the Chinese government’s renewables subsidies, in ways which

justified securing ‘home’ markets and enacting measures which could be

described as protectionist.

Golden Sun and the US solar market

By 2011, the US Department of Commerce (DoC) estimated that Chinese solar

cell exports to the US amounted to US$ 3.1 billion p.a. (DoC 2012). This was a

significant increase on 2010 (US$ 1.5 billion) and 2009 (US$ 639 million) import

values, and was evidence of the growing market power of China’s firms.

Furthermore, it was seen as a clear sign of the effect of Chinese subsidy and

incentive regimes on the country’s solar energy technology development and

manufacturing firms. Increasing import levels led, in turn, to a burgeoning

market share for Chinese firms in the domestic US solar market.

On 19 October 2011, a petition was filed with the DoC against Chinese solar

manufacturers. This can be seen as the first significant event in the start of the

‘solar trade war’ analysed in this paper. The petitioner was SolarWorld

Industries America, Inc., the US arm of German PV manufacturer SolarWorld. The

corporation was the US’ largest producer of crystalline silicon PV in 2011. The

petition claimed to represent a group of seven US solar manufacturers, and was

filed concurrently with a petition from the Coalition for American Solar

Manufacturing (CASM), an industry body, which aimed to ‘seek relief from

China’s illegal trade practices’. CASM requested the DoC to aid in halting ‘China’s

decimation of U.S. solar manufacturing and jobs’ (CASM 2012). SolarWorld’s

20

petition initially won broad labour and political support. In November 2011, the

United Steelworkers union stated their support for the petition, and on 2

December 2011, 59 members of Congress submitted a letter to President Obama

supporting SolarWorld’s initiative against Chinese solar manufacturers.

At the end of January 2012, the DoC announced that if Chinese subsidies were

found to be illegal, thus prompting the imposition of punitive import duties on

Chinese solar products, it would grant the status of ‘critical circumstances’ to the

issue. This would make the decision retroactive to 90 days before the decision

date and would thus have an impact on a large amount of Chinese solar imports

into the US (CASM 2012). This was, in fact, the first time in trade history that the

DoC had announced the potential application of a ‘critical circumstances’

measure before taking a final decision, highlighting the importance given by US

industrial and political leaders to the issue of China’s increasingly dominant

position in solar manufacturing. Indeed, when a preliminary decision on the

petition was reached on 20 March 2012, ‘critical circumstances’ were

immediately applied, retroactively dated to the period from late December 2011

onwards. This sparked what became known as the ‘US-China solar trade war.’

The DoC argued that the measures were a reaction to sustained subsidy regimes

in China, which gave Chinese solar manufacturers an unfair advantage over US

firms through the ‘dumping’ of ‘artificially’ lower-priced solar products on the US

market:

21

‘Commerce determined that Chinese producers/exporters have sold solar cells in the United

States at dumping margins ranging from 18.32 to 249.96 percent. Commerce also determined

that Chinese producers/exporters have received countervailable subsidies of 14.78 to 15.97

percent’ (International Trade Admininistration 2012).

Subsequently, in October 2012, the US imposed duties on Chinese solar imports

of between 14.78% and 15.97%, depending on the manufacturing corporation.

The DoC’s slating of Chinese solar imports rested on policy discourses that

identified Chinese solar firms as competing ‘unfairly’ in the US market. The DoC

identified China’s solar subsidies as being unfairly supportive of the country’s

solar corporations: implicit in this reasoning was the normative assumption that

firms can, do and should compete on a level playing field. This discourse helped

to justify the introduction of countervailing measures by the DoC against Chinese

solar manufacturers.

The discursive construction of China’s support for solar manufacturers was

articulated at several levels. On the one hand, the subsidies were depicted as

being contrary to the ideal of free trade. As the president of SolarWorld

Industries America stated, the firm’s petition aimed to ‘hold China accountable to

world trade law’ (Binser, in SolarWorld 19 October 2011) and to stop China from

‘dismantling’ the US solar industry (Santarris 2011). Another discursive

construction focused on the subsidies’ effect on ‘green collar’ jobs in the US:

China’s government and its solar firms were accused of a ‘decimation of U.S. solar

22

manufacturing and jobs’ (SolarWorld 19 October 2011). As SolarWorld’s head of

corporate communications and sustainability for the Americas stated:

‘The petitions allege that the Chinese government – its state-controlled financial, utility and other

institutions intermingled with its solar manufacturing industry – has deployed an arsenal of land

grants, contract awards, trade barriers, financing breaks and supply-chain subsidies to advance

its pricing and export aggression. China exports nearly all of its production to benefit from other

markets’ consumption incentives while increasing output and impeding imports. Along the way,

it also sidesteps U.S.-level manufacturing standards for labor, quality, and the environment’

(Santarris 2011, 1).

Thus, US measures against Chinese solar imports were based in large part on the

identification of said imports as threats not only to market security, but as risks

to the US’ green economy and to the livelihoods of workers involved in ‘green’

industrial sectors such as solar power. This, in turn, was based on the

deployment of ideals of ‘free trade’ and of a constructed need for green economy

sectors to emerge and develop with minimal government support. This

construction was, as shall be shown below, disingenuous for two reasons. Firstly,

it largely ignored increasing federal support for solar technologies as part of the

US’ stimulus funding arrangements, as was the case with Solyndra and other US

solar firms. Secondly, the petition’s stance against government support for solar

technology manufacturing ignored a large swathe of the solar industry, namely

installation corporations and their workers, who benefited from the availability

of cheap Chinese solar imports, which helped to stimulate the expansion of the

23

US solar installation industry, thus promoting the generation of new green collar

jobs in the US.

Golden Sun and the EU solar market

China’s role in the EU solar market was as significant as it was in the US by the

end of the 2000s. By 2011, the EU absorbed 57% of Chinese solar manufacturers’

exports, worth an annual US$ 27.4 billion. Large import volumes were crucial to

EU member states meeting renewable energy targets: solar installations were

part of national strategies for meeting renewables generation benchmarks.

Chinese solar imports helped to fill a gap between demand and supply in the EU:

while EU solar cell production only increased slightly in 2007-11, from 1,062 to

2,078 MW p.a., over the same time period Chinese solar cell manufacturing

increased from 1,088 MW to 21,000 MW p.a.9 The importance of available solar

capacity for import and installation can be seen in the fact that in 2010, for the

first time, the generation capacity installed over the course of the year in the EU

was larger for solar than for wind energy projects (Bai et al., 2012). Thus, solar

imports from China were, up to 2012, central to EU countries’ attempts to

diversify their energy generation profiles.

The ‘US-China solar trade war’ spread to the EU in 2012, following a pattern

similar to that seen in the US dispute. On 24 July 2012, the EU ProSun coalition (a

group of 25 European solar panel manufacturers) filed an anti-dumping

complaint against Chinese imports. The group was led by the German arm of

SolarWorld, the same corporation which was the main petitioner in the US case.

24

The context cited in the petition was similar: it argued that EU firms were

increasingly unable to compete against subsidised Chinese imports. The effect of

Chinese imports on the EU solar market was indeed significant: for example,

while in 2010 three EU solar firms went bankrupt, by 2011 this figure had risen

to six, with several more firms undergoing significant financial strain. During the

period between January and July 2012 alone, 25 EU solar firms went bankrupt,

one firm announced that it was leaving the solar business, one declared the

shutdown of production, and three firms partially closed their solar production

lines. In addition, three EU solar firms were taken over by Chinese investors up

to July 2012 (EU ProSun 2012a).

EU ProSun’s discursive construction of Chinese solar subsidies and of Chinese

solar manufacturers’ role in the EU market followed similar lines to the

SolarWorld-led discursive strategies utilised in the US in 2011. In particular,

discourses focused on pitting European ‘innovation’ vis-à-vis Chinese ‘mass

imports’. This constructed an unfavourable comparison based on the depiction of

Chinese firms as Byzantine and based on subsidies and a cheap labour force that

was not as skilled as the European solar labour force:

‘Europe has the leading experts in the field of PV photovoltaics... Thanks to this valuable human

input, European products are known for good quality and sustainability. This is an advantage

that new entrants such as China, known for low-wage and low-skill workforce can’t easily

overcome’ (EU ProSun 2012b).

25

Furthermore, the discursive strategies employed in both the EU and the US cases

focused on the loss of jobs that resulted from Chinese firms’ market entry. As EU

ProSun argued:

‘Companies in Europe can only compete by their advantage in innovativeness, new technologies,

better quality, affordable production methods thanks to full automatisation and many years of

experience, however the magnitude of Chinese undercutting brings those efforts down. Many

companies already went bankrupt, many are laying off workers or stepping out of business’ (EU

ProSun 2012a).

By early September 2012, the European Commission (EC) announced that anti-

dumping investigations had begun (EC 2012a; International Centre for Trade

and Sustainable Development 12 September 2012). In November 2012, the EC

began a separate, EU-wide anti-subsidy investigation into solar imports from

China. Of particular concern to the Commission was the alleged ability of Chinese

solar manufacturers to obtain credit at below-market rates, and the relative ease

of writing down loans which could not be repaid (EC 2012b). Measures were

rapidly applied: on 5 June 2013, the EU activated provisional import duties

averaging 47.7% on Chinese solar imports. Following negotiations on a

minimum import price, most Chinese manufacturers agreed, in August of the

same year, to the imposition of a minimum price as an alternative to the payment

of duties (EC 2013a). Not all Chinese solar corporations agreed to this

undertaking, and in December 2013, 47.7% import duties were confirmed by the

EC for those corporations which did not agree to minimum import pricing, for a

duration of two years (EC 2013b). The EC’s discursive construction of solar

26

imports mirrored to a large extent the ways in which EU ProSun depicted

Chinese imports, as being unfairly supported and as contrary to a free market

ideal:

‘The duties, combined with the undertaking, are expected to stop the downward spiral of prices

on solar panels. Green sustainable development is only possible with sustainable industries. In

this respect, stabilized prices are important not only for current production, but future

investment decisions too’ (EC 2013b).

From the quote above, it is clear that subsidies were constructed as negative in

light of their effect on solar panel prices: at the same time, a potentially

contradictory discourse focused on the need for a ‘stabilized’ market is also in

evidence: a sustainable green economy is thus defined with a certain implicit

level of market control (and, thus, government involvement).

Discussion and conclusion

Chinese solar manufacturing firms’ emergence in the 2000s was simultaneously

constructed as an exemplary form of economic development, as a shining

example of state-market relations in the promotion of a broader ‘green

economy’, and as a threat to the success of European and US renewables firms at

a time of reduced direct subsidies. The construction of China’s solar industry as a

negative and threatening influence on established markets is part of a process

that constructed specific, cultural economic meanings around China’s solar

27

sector. The following discussion engages, firstly, with the specific discursive

strategies identified above, before discussing the utility of considering various

discursive actors’ performance of specific sectors such as the Chinese solar

industry.

Policymakers in the EU and the US identified Chinese manufacturers as threats to

US and EU solar firms. This was enabled by relational interactions between

groups of firms such as SolarWorld, which communicated their difficulties and

fears through discursive mechanisms such as press releases and trade disputes.

At the same time, implicit within the criticisms levied at China’s support for its

solar sector were critiques of Chinese capitalism, in which state-backed

neoliberal reforms and economic liberalization policies went hand in hand with

the state’s identification and backing of strategic economic sectors.

There is no doubt that China’s solar subsidies have had a marked, mostly

negative effect on US and EU solar manufacturing firms, as well as in emerging

economies, such as India, that are attempting to build a solar technologies

manufacturing base to rival China’s. Nonetheless, it is key to note that the same

critiques levelled at the Chinese solar industry (namely, its reliance on

government subsidies and its effect on ‘green collar jobs’ in the US and EU) can

be made, albeit on a different scale, with regards to the US and EU solar industry.

With regards to subsidy programmes, similar (if smaller) programmes have been

instituted (and in some cases subsequently removed) in the US and EU solar

28

markets. An example of this is the US’s federal Loan Guarantee Program (LGP),

which loaned a total of US$ 13.27 billion to US solar energy firms (DOE 2012a).

The LGP included a US$ 535 million loan to solar corporation Solyndra: the

largest LGP loan awarded to a renewable energy firm. There have also been

claims that US solar firms have engaged in the practice of flooding foreign

markets with low-cost solar products: for example, US solar manufacturers such

as First Solar are among a number of US firms which India has asked the WTO to

investigate in an anti-dumping complaint (Lillian 2012). In addition, China has

protested against feed-in tariffs enjoyed by solar generation projects in Greece

and Italy: at the time of writing, a dispute was under consideration with the

World Trade Organization (WTO) (WTO 2012; International Centre for Trade

and Sustainable Development 5 November 2012).

With regards to the loss of ‘green collar jobs’ as a result of Chinese solar

subsidies, even though the petitions discussed above constructed solar imports

as destroying solar manufacturing jobs in the US and EU, the imposition of

import tariffs was seen with alarm by other sections of the US and EU solar

industry. For example, solar installation firms, which benefited from the rise in

installations fuelled by the availability of increasingly cheap solar products,

expressed worries about the effect of anti-dumping measures on the continued

viability of green collar jobs in solar installation. In the US, the Solar Energy

Industries Association (SEIA) opposed the petition by SolarWorld, as well as

subsequent import tariffs imposed by the DoC on Chinese imports (SEIA 2014).

SEIA argued that solar installation and development firms would be harmed by

29

such measures, which were aimed predominantly at protecting PV

manufacturers. Indeed, by the end of 2013 there were 69,658 workers employed

in solar installation in the US, compared to 29,851 employed in solar

manufacturing (Solar Foundation 2014). This concern was echoed in the EU,

where 14 out of 27 member states opposed the imposition of import duties in

2014, although this appeared to be in part due to Chinese threats to place import

duties on goods (such as wine) produced by individual member states if the

tariffs were to be imposed (Emmott and Bilby 2013).

The growth of China’s solar industry to 2012, and its rapid expansion since the

implementation of government-backed subsidies, is the context within which a

specific cultural economy of this industry has been constructed by actors in the

US and EU. By focusing on the growth of China’s solar economy on the one hand,

and on the reactions this has prompted in the specific historical and economic

‘moment’ of the US/EU-China ‘Solar Trade War’, the paper has analysed the

discursive strategies through which relational groups of actors have attempted

to perform a sector of the economy which was seen as threatened by Chinese

entrants. The trade disputes analysed above highlight, firstly, the key role of

state-firm relations in constructing and articulating identities and meanings

around sectors perceived as being part and parcel of a national, domestic

economy. These constructions were based, in part, on resistance to foreign

corporate entities’ increasing weight in what was identified as ‘domestic’ solar

markets. They were also rooted in wider societal contexts: for example, in

arguing for the imposition of import duties and penalties as a way of protecting

30

the domestic solar market, US and EU firms mobilized discourses around the

preservation of green collar jobs at a time of broader financial crisis, recession

and rising unemployment in both the US and the EU. Therefore, the Solar Trade

War can be seen as a useful moment, bounded in time, through which a specific,

relational performance of an economic sector by a defined set of actors can be

identified and investigated.

Finally, the framing and construction of the US/EU-China Solar Trade War

highlights the potential for further research at the interface between the

development and deployment of low carbon economic strategies and the

varieties of capitalism that are being brought to bear on such developments.

While the various, largely neoliberal economic strategies which have been

implemented across the US and the EU are aimed at fostering renewable energy

technology markets in the context of variable government support and subsidy

regimes, strategic renewable energy technology investments by the Chinese

government can be seen as an example of the Chinese state operating in a

context of highly variegated capitalism in which state-led neoliberalism is key. In

this context, China can be conceptualized as an ‘effervescent state’ which deploys

financial and other (largely macroeconomic) interventions as a way of accessing

global markets (Lim 2010), at the same time as specific industrial and economic

sectors (such as green energy technology industries) are selected as strategic

‘champions’ for desired, planned development trajectories with both domestic

and international strategic objectives (Smtih and Raven 2012). This confirms the

utility of viewing emergent socio-technical ‘niches’ such as the solar industry

31

through a cultural economy lens, while underlining the role of government

actors in enabling and promoting the development of these niches.

Notes

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1 The paper describes China’s solar energy strategy as a key plank of its energy security

strategy, while remaining aware of the key concerns over energy resilience (in terms of

reliability of supply, and grid instability) which renewables pose.

2 Crude oil and natural gas generated 9.8% and 4.3% respectively (Wang and Chen 2010).

3 In the context of the State Council’s announcement, ‘new energies’ include nuclear power,

clean coal and natural gas.

4 In comparison, the second largest realizable PV potential for 2020 was assessed, in 2008, to

be the EU, with 92.2 TWh realizable potential, and the USA, with a potential for 68.4 TWh (IEA

2008).

5 However, the 2011 installed capacity represented a doubling of the installed solar capacity

in China in 2009 (Cheung 2011).

6 The Chinese Ministry of Finance is hereafter referred to as MOF; the Chinese Ministry of

Housing and Urban-Rural Development is hereafter referred to as MOHURD.

7 The Golden Roofs programme was part of the MLTDPRE’s Building-Integrated Photovoltaics

(BIPV) strategy.

8 The loans made by the China Development Bank to the solar industry in China were cited as

a cause of Solyndra’s collapse both by the Executive Director of the Loans Programs Office,

and by the US Secretary of Energy, in comments before the Subcommittee on Oversight and

Investigations Committee on Energy and Commerce in 2011 (Neilson 2012).

9 In 2007-11, however, the year with the highest EU solar cell production was 2010, with

3,120 MW produced (Bai et al., 2012).