Xu Qinhua, Chinese Minmin University: China's photovoltaic should actively expand to respond to the pressure of Europe and the United States

A number of European PV companies have recently encountered a production crisis, which has been blamed by some in the EU on the large number of Chinese PV products. According to reports, the EU is preparing to launch an anti-dumping investigation against Chinese photovoltaic companies. Photovoltaic manufacturing is an area with relatively full market competition, and it is also an industry with a global layout, and it is also a "weak industry" that is vulnerable to policy influences and the impact of the global political and economic situation. In the case of strong development, China's photovoltaic industry must still be vigilant against the challenges brought about by various internal and external environmental uncertainties, especially changes from macroeconomic, geopolitical, global governance, technological innovation and other fields, and some such as new technological breakthroughs in energy transition will even play a subversive role in the photovoltaic industry. Green development is one of the main contents of promoting China's modernization, and renewable energy, especially the photovoltaic industry, plays an important role in it, so it is necessary to carefully study the changes in the global political and economic situation and their impact on the industry, and find countermeasures.

The degree of economic development of a country is closely related to the scale of photovoltaic power generation. At the beginning of the 21st century, developed countries encouraged photovoltaic power generation in the economic upcycle, which led to the development of China's photovoltaic manufacturing industry. Since the global financial crisis in 2008, the degree of economic recovery in developed countries has been uneven, and the demand for photovoltaic power generation has also fluctuated accordingly. Multiple factors such as inflationary pressure and high energy prices have constrained the energy transition of developed countries, but they have also promoted the layout of new energy in the United States and Europe, and photovoltaic power generation is favored because of its economy. Although emerging markets and developing countries have both internal and external needs for climate change independent contributions and their own energy transition, their development of the photovoltaic industry is generally limited by factors such as poor energy foundation, weak financing capacity, few financial instruments, and backward technology. While the financing costs of clean energy sources such as photovoltaics are eventually offset by lower operating costs, they often require high upfront expenditures. The current global economic fragmentation has a profound impact on the development of the PV industry within developed countries, developing countries and emerging markets.

Since the Trump administration provoked Sino-US economic and trade frictions, the impact of the international political landscape on economic, trade and investment activities has intensified. The world economy has accelerated from globalization to blocization, and the G7 countries have shifted from focusing on efficiency to security. The United States regards clean energy technology as a technology that affects national security, restricts China's access to and use, accelerates the "decoupling and disconnection" with China, and takes measures including export restrictions, anti-dumping, and countervailing measures against China's photovoltaic industry, and implements anti-circumvention investigations on photovoltaic products re-exported from Cambodia, Malaysia, Thailand, and Vietnam. Affected by this, there is uncertainty about the import policy of China's photovoltaic products by US allies. The photovoltaic industry will be an important battlefield in the game of great powers, the control of upstream silica resources and the production of raw materials such as silicon ingots and silicon wafers, the manufacturing and upgrading of midstream solar conversion equipment, and the ability to invest in photovoltaic power generation equipment and infrastructure construction will be the focus of the geopolitical game between major powers.

Addressing climate change is one of the main driving forces for the development of the photovoltaic industry. Whether the PV industry can receive effective policy support is closely related to the status of climate change issues in global governance and domestic politics. For a long time, there has been a huge controversy about how to deal with climate change. From the Kyoto Protocol to the Paris Agreement, international treaties have become less binding on developed countries to reduce their emission obligations. The Russia-Ukraine conflict has hit the economies of European countries, and some countries have reduced their willingness to low-carbon development and resumed the use of some high-carbon energy sources. The global policy to deal with climate change has changed from simply mitigating climate change to paying equal attention to climate change mitigation and adaptation, and the position of photovoltaic power generation in responding to climate change may be shaken. In addition, photovoltaic power generation has obvious advantages in terms of clean, renewable and low-carbon, but there are also unfavorable factors such as random intermittent output and high cost of energy storage. In the global energy transition, photovoltaic power generation is facing competition from low-carbon and zero-carbon energy sources such as nuclear power, hydropower, natural gas, wind power, and hydrogen energy.

Nowadays, the global economic governance mechanism is gradually weakening, and various emerging regional economic governance mechanisms are in the ascendant. China has acceded to the Regional Comprehensive Economic Partnership (RCEP) and is currently seeking to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Digital Economy Partnership Agreement (DEPA). China's accession to these new trade and investment agreements is faced with new rules in terms of low carbon, labor standards, social responsibility, and corporate governance. The European Union and the United States are adjusting their trade and investment policies, the European Union has implemented a carbon border adjustment mechanism, and the United States and Europe have strengthened their review of supply chain compliance. China's photovoltaic enterprises have been able to adapt to and use the rules of the World Trade Organization, but they have not yet fully grasped these new trade agreements and the new rules in the target markets of the United States and Europe. Photovoltaic power generation is highly dependent on policies, such as subsidies, tax incentives, mandatory targets, green certificates, carbon trading, etc. As the global economy becomes more fragmented, there is uncertainty about whether financially weak countries will be able to sustainably support photovoltaic power generation. The fluctuation of demand caused by regional or country-specific policy changes will indirectly affect the stable development of the photovoltaic industry chain.

The photovoltaic industry is one of the strategic emerging industries in China to participate in international competition and gain a leading edge. China's photovoltaic industry started late, but with the dual support of national manufacturing policies and overseas market demand, it has jumped to the leading position in the world's photovoltaic power generation field. Over the past 20 years, China's photovoltaic industry has repeatedly suffered from the impact of reduced demand for photovoltaic products and trade protection in developed countries, but China's domestic photovoltaic power generation is still rising against the trend. At present, China is gradually getting rid of the passive situation in the oil and gas era, becoming the world's largest country in the research and development of renewable energy technology, equipment production and application, and is at the forefront of the world in the production of renewable energy equipment such as solar panels.

When more than 80% of the world's product supply chain is concentrated in China, while we are proud, it is also time for us to learn to think more about future development with a sense of worry, because in this case, we are relatively vulnerable to changes in the external environment. How to disperse the supply advantages of specific industries in China to other countries, and truly make China's photovoltaic industry a global photovoltaic industry led by China, which not only shares the United States but also reduces the investment risk of its own country and its own enterprises. China's PV industry needs to continue to actively expand outward when deeply participating in the national development of Chinese-style modernization, new urbanization, the "3060" dual carbon goal, ecological civilization construction, and common prosperity. The just-signed joint statement between China and Uzbekistan contains cooperation clauses on "localizing materials and equipment needed for the development of green energy, including solar panels, silicon wafers, and batteries, and jointly training professionals", which is a useful direction.

(The author is Vice Dean of the National Institute of Development and Strategy, Renmin University of Chinese, and Wu Yuzhang Distinguished Professor)