The World's #1 Renewable Energy Network for News, Information, and Companies.

China Solar: New EU Trade Settlement, Defaults Loom

Mar 21, 2014

China and the European Union have reached a new settlement that should formally end their ongoing dispute over solar panels, contrasting sharply from a more confrontational tack taken by the U.S. in a similar spat. Meantime in other solar news, a looming new bond default by a mid-sized panel maker has become the latest sign that Beijing is prepared to let more of these smaller companies miss their debt payments. That approach will force these smaller firms to either leave the industry or sell their money-losing operations to larger peers, in a much-needed industry consolidation.

Let’s start with the latest China-EU settlement, which involves polysilicon, the main ingredient used to make solar panels. Beijing opened an anti-dumping investigation into EU polysilicon in late 2012, a move that many saw as retaliatory for an earlier EU probe that found Chinese solar panel makers were selling their products in Europe at unfairly low prices. The original dispute centered on complaints by both the U.S. and Europe that Chinese solar panel makers were undercutting their western rivals after receiving unfair government support in the form of subsidies like low-cost land and cheap loans.

China and Europe settled their initial dispute over solar panels last year, in a landmark deal that saw Chinese manufacturers agree to raise their panel prices to a minimum level agreed to by both sides. Now this latest agreement will see European polysilicon makers also agree to sell their products into China at a minimum price agreed to by both sides. The main beneficiary of this new deal is Germany’s Wacker Chemie, which is Europe’s main polysilicon seller to China.

The EU’s 2 settlements contrast sharply with the approach taken by the U.S., which conducted its own investigation and last year imposed anti-dumping tariffs on Chinese solar panels. As a result, China opened its own probe into U.S. polysilicon, which ended this year with retaliatory anti-dumping tariffs against US-made polysilicon.

On the one hand, I should applaud the EU for its more reasonable and pragmatic approach to this matter, even though the setting of minimum prices has nearly the same effect as imposing punitive tariffs. But that said, I do also think the U.S. approach sends a stronger message to Beijing that it needs to stop its practice of giving money to industries it wants to promote. Perhaps this mixed approach by the US and Europe is the best way to send the message to Beijing, providing both positive and negative incentives to change its behavior.

From that solar dispute, let’s look quickly at the latest looming bond default from smaller panel maker Baoding Tianwei(Shanghai: 600550). The company has announced that trading of 1.6 billion yuan ($260 million) worth of its bonds has been halted on the Shanghai Stock Exchange. Tianwei has lost big money for the last 2 years, so it’s not a huge surprise that it might not be able to repay its debt. The bigger surprise is that it might be allowed to default on the bonds, since Beijing or local governments often come to the rescue of companies that risk debt defaults.

We saw something similar happen earlier this month when Chaori Solar (Shenzhen: 002506), another smaller player, failed to make an interest payment for some of its bonds, becoming the first corporate bond default in modern Chinese history. This latest case involving Tianwei shows that Beijing is preparing to allow more such defaults on solar debt. That should ultimately force many of these smaller players to either shut down or sell their operations to larger players like Canadian Solar (Nasdaq: CSIQ) and Trina (NYSE: TSL), which are emerging as industry consolidators.

Bottom line: Europe’s latest solar settlement with Beijing will end their trade dispute in an amicable way, while a new looming bond default by Tianwei reflects China’s ongoing resolve to consolidate the sector.

This blog was originally published on Young's China Business Blog and was republished with permission.

Lead image: Gavel via Shutterstock

The information and views expressed in this blog post are solely those of the author and not necessarily those of or the companies that advertise on this Web site and other publications. This blog was posted directly by the author and was not reviewed for accuracy, spelling or grammar.


energy storage

Green Charge Networks Enters Cal-ISO Market with 61 Energy Storage Systems

Green Charge Networks, the largest provider of commercial energy storage in the U.S., said it has entered the Califor...


US Solar Hosts Sierra Club Solar Meeting

This past Monday, US Solar welcomed a new group to its solar training classroom – The S...

US Solar Invited to Speak at Intersolar North America

Intersolar, the largest solar conference and expo in North America is right around the ...

Yaskawa – Solectria Solar Provides Inverters for One of the Largest Professional Sport Stadium PV Systems in North America

Yaskawa - Solectria Solar, a leading U.S. PV inverter manufacturer, announced today tha...

US Solar - Green Planet Festival Highlights Solar Energy and Solar Training This Weekend

US Solar Institute (USSI) is excited to announce that they are the educational sponsor ...


NY Gov. Cuomo Pledges to Create Carbon Market use Solar, Wind to reduce Climate Change

This week former Vice President Al Gore joined with New York Gov. Andrew Cuomo (D) to sign the Under 2 MOU, a directi...
clean energy

In Clean Energy, The Truth Matters

A group of about 20 protesters gathered outside the Sheraton in Burlington, Vt., early on Oct. 8 as attendees arrived...

Industry Focus: Cleantech: 1366 Technologies joins Solarcity in New York

1366 is set to build a factory just up the road (OK, it is a long road – NYS Thruway) from Solarcity.  The...


Doug Young has lived and worked in China for 15 years, much of that as a journalist for Reuters, writing about publicly listed Chinese companies. He currently lives in Shanghai where he teaches financial journalism at a leading local university. He also writes daily on his blog, Young’s China B...


Volume 18, Issue 4


To register for our free
e-Newsletters, subscribe today:



Solar + Storage: Capturing Opportunities and Overcoming Challenges ...

The convergence of solar and energy storage applications is under way. T...

UL Photovoltaic (PV) System Installation Certification Exam

UL University and US Solar Institute have partnered to offer the Photovo...

PV-301: Advanced PV Installation

PV301 by The US Solar Institute is comprehensive and highly advanced 40 ...


What's On The Card?

Think back to the last networking event you attended. You probably walke...

Georgia Legislature Approves PPA’s, Florida Hoping to Follow

Ah, the sunny south, the land of peaches, oranges and solar potential. I...

Tacos, Tequila and LSX...a perfect afternoon

October 7, 2015 – Located on the eastern tip of the man-made pen...


Tweet the Editors! @jennrunyon


Renewable Energy: Subscribe Now

Solar Energy: Subscribe Now

Wind Energy: Subscribe Now

Geothermal Energy: Subscribe Now

Bioenergy: Subscribe Now