EU Initiates Probes into Chinese Solar Panel Subsidies, Citing Market Distortion

The European Union has launched two significant investigations into the practices of Chinese solar panel manufacturers, accusing them of receiving subsidies that unfairly distort the market. This move underscores a growing tension between the EU and the suppliers of inexpensive Chinese imports, which have been blamed for the economic strain on Europe’s solar industry.

Internal Market Commissioner Thierry Breton, writes FT, emphasized the strategic importance of solar panels for Europe and stated that the investigations aim to ensure Europe's economic security and competitiveness. The probes will specifically focus on two consortiums involved in the development of a solar park in Romania, which is partially funded by EU money. These consortiums include the German subsidiary of Longi Green Energy Technology and two European subsidiaries of Shanghai Electric, a company backed by the Chinese state.

The European Commission has cited "sufficient indications" that both entities have benefited from foreign subsidies that skew the internal market dynamics within the EU. The move has drawn no immediate response from Longi or Shanghai Electric, though Longi has previously cautioned Western countries against excluding Chinese suppliers.

This action marks only the second instance of the EU deploying a new foreign subsidies law that took effect last year, signaling a robust approach to regulating the influence of external subsidies within its market. The law requires companies to disclose any bids for public tenders above €250 million if they have received over €4 million in non-EU subsidies in the past three years.

The investigation has sparked concern from the China Chamber of Commerce to the EU, which criticized the law for seemingly targeting Chinese companies unfairly and acting as a tool of economic coercion.

The backdrop to these probes is the rapid expansion of solar capacity in Europe, facilitated by Chinese imports, even as European manufacturers face a surplus crisis exacerbated by China's clean technology boom. This has led to significant losses and closures among EU solar panel producers, prompting Brussels to pledge support and funding to the beleaguered sector.

As the EU prepares to sign a comprehensive plan to bolster its solar manufacturing capabilities, these investigations signal a critical juncture in Europe’s approach to balancing its green transition goals with the need for fair and competitive market practices.