Moves and Countermoves: China Trades Climate for Cheap Solar

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My first article with The Trouble discussed domestic impacts of Trump’s solar tariffs, specifically opportunities for workforce mobilization and climate justice organization within the installation industry. Given the new tariffs hitting the global markets this week, it is crucial to examine the implications for solar implementation and expansion abroad. While many news sources have detailed disruption to the renewables industry, the ramifications for carbon emissions, most urgently in the case of China, have surprisingly been largely ignored. In 2017, China led global solar capacity expansion, outpacing the United States to account for half of new solar modules installed with 53 added gigawatts. This rapid expansion was possible largely because of the Chinese government’s dramatically increased subsidization  of residential solar installations, a tactical move meant to offset the impending threat of climate change in a rapidly industrializing, high-pollution economy. However, in response to Trump’s recent round of tariffs, the Chinese government has chosen to decrease funding for domestic solar in the hopes of keeping prices stable for U.S consumers.

Let’s take a look at the economic logic behind this countermove and the implications for leftist, labor oriented climate policy.

Without market intervention, Trump’s tariff will lead to an increased price on the export market for solar panels, and a subsequent decline in American consumption of Chinese panels. But instead of allowing their export price to rise, the Chinese government will drastically slash its funding of domestic solar, thereby increasing the price Chinese consumers face and decreasing demand for residential solar panels. The Chinese government hopes that this decrease in domestic demand will allow export price to remain functionally stable for U.S. consumers despite Trump’s tariff. However, the future of global solar expansion has been shaken by this turbulence, as Chinese manufacturing firms’ market shares have tumbled. As Trump continues to pursue increasingly futile protectionist measures, the global industry enters a period of uncertain transition, its fate in the hands of an anti-climate Trump Administration.

This uncertainty will likely increase political tension within firms, due to implications for Chinese workers who exist within an increasingly contentious labor environment. Decreased domestic consumption will negatively impact jobs, given that Chinese capacity expansion has accounted for a plurality of global growth. Research indicates that the Chinese labor force tends to pursue political action as economic growth slows, and the solar workforce has already proven themselves capable of organizing a sit in at a Guizhou factory. The state’s policy shift may provide new, further opportunities for labor organizing, as the future of Chinese solar jobs hinges on continued domestic consumption. Past mobilization has included strikes and sit ins centered around the issues of layoffs and creation of new unions, which could be particularly pertinent to jobs in emerging green technology industries. Furthermore, the negative employment effects of Trump’s tariffs, which impact half of the United States' Chinese imports, serve as a rallying point for laborers in both the solar industry and industrial sector writ large. The international labor movement would do well to align itself with the interests of Chinese workers, whose jobs are a stake in this latest resurgence of protectionist policy.

Beyond market effects, these tariffs will hinder decarbonization efforts as growth of Chinese domestic residential solar slows. It is urgent that Chinese firms and households transition to green energy as swiftly as possible to decrease both current and future carbon footprints. In recent years, China has prioritized clean energy investment, reducing carbon dioxide emissions per unit of GDP by 17 percent between 2010 and 2015, with future plans originally allocating $360 billion in renewables investment by 2020. Decreased state level solar funding will now cut solar capacity by 20 to 25 gigawatts by 2020. With some basic calculation, it’s possible to quantify a rough approximation of the lost opportunities for CO2 reduction. Based on industry estimates, 20 gigawatts of capacity would decrease annual emissions by 19.2 million lbs of CO2. In five years, an extra one billion pounds of CO2 will be released into the atmosphere as a result of the decrease in state funding for Chinese residential solar, without accounting for the effects of possible technological distortion and investment flows that could further cripple green technology expansion.

The ripple effects of such a decline will certainly extend past the immediate market conditions, as decreased investment today delays technological innovation in the future. The crisis of carbon emissions in a high polluting economy demands urgent attention, while the employment effects for blue collar workers may amplify ongoing organization efforts. As the industry regroups in the coming weeks, policymakers should prioritize the ultimate goal of solar expansion: decreasing global emissions and paving the way for a sustainable future. Further, international labor movements may exploit this crisis to vocalize their demands through direct action similar to past efforts, as labor in China will be impacted as a whole due to Trump’s tariff policies.

Ishana Ratan is a PhD student at UC Berkeley. Her research interests focus on trade barriers and their role in the rapidly globalizing international economic landscape. 

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