China is tentatively considering whether to curb exports of solar manufacturing equipment to the United States in what could become another significant export restriction of a technology in which Chinese companies are global leaders.
Officials in China have discussed whether such a measure should be implemented, but talks have not progressed yet to asking feedback from the Chinese manufacturers on a potential restriction, Reuters reported on Wednesday, citing numerous sources familiar with the deliberations.
Over the past two years, China’s solar manufacturing industry has suffered from capacity and output oversupply, which have increased losses at the firms.
But China last year finally moved to tackle the overcapacity. Chinese manufacturers slashed polysilicon production by 29.6% and cut silicon wafer output by 6.7% between January and October, although production of solar cells and finished solar modules still rose year-over-year.
China is now considering curbing exports, although no decision has been taken yet, according to Reuters’ sources.
Potential restrictions would expand export curbs from rare earths to solar manufacturing equipment—another area in which China is a global leader with much of the supply and technology.
Analysts have expected export controls from China’s solar manufacturing equipment as U.S. companies led by Tesla are looking to boost solar panel manufacturing in the United States and reduce their reliance on imports from China, according to Reuters.
Moreover, Chinese firms could suffer if Tesla and others manage to significantly boost U.S. solar panel production. Chinese manufacturers would lose customers and would have helped their U.S. rivals to develop their domestic solar manufacturing industry.
“Tesla succeeding in its solar self-sufficiency push could prove a nightmare for China’s world-leading solar manufacturers,” research firm Trivium China, focused on Chinese government policy, said in a recent note carried by Reuters.
“Beijing won’t sit idly by as its industrial champions inadvertently aid the industrial policies of rival countries.”
By Charles Kennedy for Oilprice.com
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