Cheap Chinese green technology imports causing concerns for European industry transformation

The growing volumes of cheap green technologies coming out of China are leading to worries that solar panels, electric cars, batteries and other products sold below their production price are undermining Europe’s industry transformation plans, Frankfurter Allgemeine Zeitung newspaper reports. China, the world’s largest exporter, boasts production capacities for solar PV that could cover global demand two and a half times over per year; has e-car production capacities large enough to sell up to 20 million units abroad; and owns two thirds of global wind turbine production capacity, the article says. This allows the country to export technologies at prices well below competitors from Europe, as was recently lamented by solar PV manufacturer Meyer Burger, when announcing the closure of its German production site.

“China is supporting companies irrespective of its domestic demand for these products. If every country does this, we’ll have a problem,“ economist Jürgen Matthes from research institute IW told the newspaper. However, China’s government earlier this month said it regarded green technologies as the platform on which the country will base its economic growth in future. Beyond state support, China’s low labour and energy costs as well as a political system that allows fast decision making and long-term security are other factors that make its products competitive. This in turn allowed customers in Europe, the U.S. and other parts of the world to decarbonise and electrify their economies at low costs, which is exemplified by the fact that installers of solar panels in Germany are against trade barriers favoured by producers like Meyer Burger, the article says.

While countries including the U.S., Mexico or Turkey have started to shield their economies from Chinese competition, the EU’s Net Zero Industry Act so far uses tariffs and subsidies sparingly and its CBAM mechanism for climate tariffs could turn out to be insufficient, Niels Graham of U.S. think tank Atlantic Council said. A coordinated response by the G7 group of influential western-style economies could be needed to meaningfully protect domestic production capacities for future technologies, he argued.