Out of China's Shadow: Building a Clean, Trusted Solar Industry

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TABLE OF CONTENTS

EXECUTIVE SUMMARY

1

INTRODUCTION

4

CHINA’S SOLAR PV INDUSTRY DEVELOPMENT

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RAPID DEVELOPMENT: 2004-2009 CONTROLLING THE VALUE CHAIN: 2010-2018 CONTINUED DOMINANCE: 2018-PRESENT THE US RESPONDS CHINA CONTINUES TO DOMINATE OWN GOAL

8 9 13 14 15 17

THE COST OF A MISSED OPPORTUNITY

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BUILDING A CLEAN, TRUSTED SOLAR SUPPLY CHAIN

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ENDNOTES

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EXECUTIVE SUMMARY The energy transition constitutes a tremendous economic and strategic opportunity. No field demonstrates the opportunity of the moment more than the solar photovoltaic (PV) industry: Solar power promises an unrivaled clean, secure, and reliable energy supply. It also offers the chance to capture new markets, produce new jobs, and fuel new industries. In 2021, the solar PV industry accounted for some 4.29 million of the world’s 12.7 million jobs in renewable energy;1 the current market value of the solar industry is approximately 200 billion USD. That number is projected to more than triple by 2030. The growth in solar deployment has also fueled next-order technological innovation and industrial development.

But one player’s distortion of the solar sector risks undermining the opportunity it presents: China has a consolidated stranglehold over solar energy. This threatens the national and economic security of other countries deploying solar energy. It also threatens the sector’s future reliability and taints its environmental impact.

China dominates the solar energy industry. The PRC currently accounts for over 85 percent of global solar PV manufacturing capacity, including more than 85 percent of module, 86 percent of cell, and 97 percent of wafer and ingot production. And those figures only account for production in China: 99.4 percent of all PV wafers are made by Chinese companies.2 This means that: ●

China disproportionately recoups the economic boons of the solar industry: Of the 4.29 million global solar PV industry jobs in 2021, more than half were in China, compared to about five percent in the United States.

●

China claims the strategic advantage of energy security (and control): No other country produces sufficient solar inputs to meet domestic demand, now let alone in the future; China’s current production capacity is two times global demand.3 This makes the rest of the world, including the United States, dependent on a non-market autocrat for a strategic, future energy source. And that adversary has shown its willingness to weaponize supply chain reliance for coercive effect.4

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China shapes, and has an upper hand in, the technological innovation positioned to define, and make more valuable, the solar industry in the decades ahead: Chinese companies are setting international technical standards in the field; Huawei and Sungrow, two Chinese government-backed companies, have become the world’s leading providers of PV inverters and major players in smart energy management.

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There is more than strategic risk in play, too. The solar industry’s ultimate emissions impact is also at stake. China powers its “green” solar production with dirty, high-emission energy. For example, Beijing built its polysilicon industry by encouraging companies to set up production facilities in regions like Xinjiang with abundant coal reserves and low environmental regulations. As a result, the Chinese photovoltaic supply chain is about 20 percent more energy intensive than the global average.5 The CCP has also powered its solar positioning with non-market means that defy international trade regimes – subsidies, dumping, technological theft, and market barriers – all while also carrying the high emissions baggage of a consolidated value chain fueled by low-cost coal.

Belatedly, the US government has recognized the economic and national security threat posed by China’s solar industry offensive – and its assault on international trade and environmental norms.

And the United States has tried to respond. But those efforts have not succeeded. China adeptly circumvents and manipulates US defensive measures like tariffs. To add injury to injury, China is also profiting from US investments meant to protect domestic industry and shore up dependence on China. Chinese companies are projected to benefit from some 125 billion USD in federal tax credits under the Inflation Reduction Act.6 These are real risks. But the current moment also presents real opportunity. The solar industry is still maturing and growing. The United States still has the chance to capitalize on this new, strategic industry and the promise it carries for climate progress; to restore domestic industrial capacity; and to develop a reliable, domestic supply chain. In doing so, the United States can set a precedent for upholding free markets and trade to be replicated across strategic industries.

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Such an effort will demand strengthening existing policy tools and developing new ones. In order to seize the strategic, economic, and environmental opportunity of the solar industry – and, more generally, to compete with China – the United States must:

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Maintain 201 and 301 tariffs on Chinese solar products and strategically manage both exclusions and exemptions for those inputs that will permit the re-shoring of a domestic production base;

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End the moratorium on anti-dumping and countervailing duties on solar cells and modules from Southeast Asia – and apply retroactive tariffs;

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Strengthen enforcement of the Uyghur Forced Labor Prevention Act;

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Update the Tariff Act of 1930 in accordance with the Leveling the Playing Field 2.0 Act;

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Update the scope of foreign investment review to cover greenfield investment and joint ventures, while prioritizing new energy and related investments for notified and nonnotified review;

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Strengthen the Inflation Reduction Act (IRA) to prevent foreign entities of concern – namely and especially China – from benefiting from its tax credits and other support measures;

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Strengthen the IRA to include domestic content requirements – covering material inputs, project equipment, and IT equipment – for both production and investment tax credits.

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Expand production tax credits for new energy – with specific prioritization of upstream inputs, domestic content requirements, and prohibitions on foreign entities of concern – to match investment tax credits;

●

Expand covered materials of the Oil Depletion Allowance to include upstream inputs for new energy; and

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Introduce a carbon border adjustment mechanism – accounting for the upstream emissions of the inputs of Chinese goods.

Across the board, the United States must change how it thinks about new energy.

Today’s energy revolution is not just about adoption of renewables. It is also about production of renewables – and clean, secure, trusted production of those. Until that is part of the American calculus, the country risks relinquishing national and economic security, an enormous industrial opportunity, optimal green production, and influence in tomorrow’s technology.

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INTRODUCTION The solar photovoltaic (PV) supply chain is made up of five main steps: Polysilicon, a high-purity version of silicon is converted into ingots; those, in turn, are transformed into solar wafers, then cells, and then modules, the components that go into solar panels.

While there might be five main steps in the solar PV chain, there is one player with a stranglehold over all of them: China dominates the solar energy industry. The PRC currently accounts for over 85 percent of global solar PV manufacturing capacity, including more than 85 percent of module, 86 percent of cell, and 97 percent of wafer and ingot production. And those figures only account for production in China: 99.4 percent of PV wafers are made by Chinese companies.7 The top four companies in global production capacity and output of polysilicon, wafers, cells, modules, and inverters are all Chinese.8 Between 2021 and 2023, China’s module exports more than doubled.9 No other major economy’s production across the solar PV supply chain is sufficient to meet its domestic annual installation demand – now, let alone in the future. The United States, for example, while close at the polysilicon and module stages of the value chain, produces no wafers or cells.

Europe is similarly positioned. By comparison, China produces, at every stage of the solar PV value chain, some five to six times what is required for its domestic installations. And China’s current production capacity is more than two times global demand.10 As a 2023 report from the China International Engineering Consulting Corporation put it, “China’s photovoltaic industry leads the world.”11

CHINA’S SHARE OF GLOBAL SOLAR PV INGOT, WAFER, CELL, AND MODULE MANUFACTURING

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Beijing’s dominance in the solar PV industry is the product of a deliberate national strategy intended to control supply of a strategic future energy source. From the State Council’s Energy Development Strategic Action Plan (2014-2020): “Energy is the foundation and driving force of modernization… Insist on using domestic supply as the main channel to ensure energy security, and firmly grasp the initiative in energy security.” 12 By extension, China’s solar PV industry dominance is the product of dedicated state support – that includes subsidies and other forms of non-market backing and preferential policies for Chinese companies, direct government investment, low environmental regulations on solar PV manufacturers, protections for the Chinese market, and evasion and manipulation of international trade law.13 In the early 2000s, the Chinese government began a campaign to develop domestic solar PV production, fueled by state support and foreign technology and capital. After the 2008 financial crisis, Beijing moved from competing to challenge international cell, module, and wafer manufacturers to competing to control the entire solar PV value chain and its market. In 2010, Beijing launched the “Golden Sun Project,” “the strongest industrial policy support in the history of China’s PV industry;”14 at the same time, Beijing began aggressively subsidizing polysilicon producers and relaxing environmental regulations on their operations to ensure dominance at that upstream node of the value chain.

Today, Beijing’s state support for the industry continues. In 2022, the four largest solar PV manufacturers reported receiving more than 2.6 billion RMB in direct government subsidies. These include solar PV-focused funds, more general industrial support measures, and backing for participating in PRC government science, technology, and industrialization projects.15 And direct subsidies are just the tip of the iceberg. The PRC’s energy industrial policy also includes indirect

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subsidies like low-cost energy, minimal environmental regulations, low-interest loans, tax breaks, land grants, export credits, and preferential tariffs.

Disclosed PRC Government Subsidies to Top Four Solar PV Manufacturers, 2021 and 2022 (RMB)16 2022 Reported Subsidies

2022 Subsidies as a Share of Profit17

2021 Reported Subsidies

2020 Reported Subsides

Longi Solar

472,455,888

18%

358,262,982

302,808,294

Trina Solar

530,982,064

15%

372,774,208

138,308,726

JA Solar

339,784,651

6%

210,897,386

169,691,317

JinkoSolar

1,320,145,846

50%

758,658,408

247,698,910

Beijing’s effort risks succeeding – despite growing US and international efforts to defend against its predatory market distortions: The Chinese Communist Party has adeptly manipulated and evaded US trade regulations on the solar PV industry. To add injury to injury, the CCP now risks profiting from proactive US policies, like the Inflation Reduction Act (IRA), intended to bolster domestic capability and shore up dependence on China. Longi, Trina, JA, and Jinko have all four announced US manufacturing investment since the passage of the IRA by the US Congress. This positions those firms to benefit from that policy’s incentives – all while continuing to leverage their Chinese government, non-market backing to undercut competitors. Their US operations also position these companies to participate in, and potentially block, trade cases against China’s non-market policies.

And the value of these companies’ investments for the United States is limited: Their investments tend to be entirely downstream and assembly projects, the value-add inputs for which flow from China.

Beijing’s solar stranglehold constitutes a threat for the United States. The world is moving toward a new energy era. That era promises economic boons for those who can capitalize on it. It also promises to change the nature of energy geopolitics and security. If Beijing is able to cement control over the solar PV industry, Beijing will be able to control the economic fruits of a key, emerging industry and control critical international energy resources. This control also threatens the solar industry as a future energy source: The PRC’s stranglehold over the solar industry puts it at Beijing’s mercy and means that its current cost structure is fueled by dirty energy sources.

Moreover, if Beijing succeeds in the solar industry, it will have established a path – based on nonmarket and environmentally-unfriendly methods – for controlling the larger basket of renewable energies, as well as other strategic industries that it has prioritized. Rebuffing Beijing’s solar energy gambit matters for US national and economic security; for clean energy ambitions and climate impact; for US technological innovation; and, more generally, for setting a precedent with respect to free markets and trade.

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But with risk comes opportunity. US policy – on solar, new energy sources, and the Chinese Communist Party – is at a crossroads. And the US benefits from an enormous energy market, advanced energy technology, and a long-standing strategic culture of energy independence. All of those can be leveraged to take advantage of today’s moment to resolve dependence on China, restore domestic industrial capacity, and capitalize on the economic and strategic advantages of today’s energy revolution. In doing, so the United States can set a precedent for upholding free markets and trade, to be replicated across strategic industries.

This effort will demand new policy tools and the strengthening of old ones – closing loopholes in tariffs and tariff enforcement, for example, and protecting government funding from entities of concern, while also developing novel methods to protect the market from PRC distorters.

This effort will also demand a change in how the US thinks about new energy. Today’s energy revolution is not just about adoption of renewables. It is also about production of renewables – and clean, secure, trusted production of those. Until that is core to the American calculus, the country risks relinquishing national and economic security, an enormous industrial opportunity, legitimately green production, and a say in tomorrow’s technology.

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CHINA’S SOLAR PV INDUSTRY DEVELOPMENT The PRC’s approach to capturing the solar PV industry reflects Beijing’s broader industrial policy.

China’s solar energy program is backed by the Chinese government; it was initially fueled by foreign technology, obtained both licitly and illicitly. Beijing has succeeded by propping up domestic manufacturers all along the value chain, creating an artificial domestic market, and excluding foreign producers; by lowering environmental regulations on its industry (and leveraging low-cost, high-emissions energy sources for manufacturing); and by evading international trade regulations. Increasingly, Beijing also controls the technological trajectory of the solar PV industry, a reality that risks cementing Chinese dominance and disproportionately directing the industry’s returns to China, at the expense of the global system.

The sections that follow detail three main phases of China’s solar PV offensive: Beijing’s jump onto the solar scene from 2004 to 2009, bid to control the entire value chain from 2010 to 2017, and continued dominance despite US and global responses since 2018.

RAPID DEVELOPMENT: 2004-2009 Between 2004 and 2009, China leveraged foreign resources to catch up to global leaders in the solar energy industry. At the beginning of that period, the US, Japan, and Europe led the field. China barely figured. In 2003, China’s share of global solar cell production was less than two percent. But by 2005, that figure had more than tripled to seven percent; by 2007, it had almost quadrupled to reach 22.5 percent. In 2010, China controlled about half of the global PV manufacturing industry.

Japan, whose market share had been 38 percent in 2006, was down to 8; Germany had slipped from 19 to 8.18 This Chinese leapfrog was fueled by foreign technology, capital, and markets. China’s PV champions and their offshoots established in the early aughts – including major contemporary players like JA Solar – were spearheaded by technologists who had studied in the West.19 They were built on a technological foundation imported, and in some cases stolen, from abroad.20 In many cases, these PRC upstarts funded their operations with US capital. US investors funneled some 7 billion USD into Chinese PV companies between 2005 and 2007.21 If foreign resources were the fuel for the rapid development phase, Chinese government support was the engine. Beijing’s Tenth Five Year Plan (2001-2005) included among its principal objectives promoting new energy, namely the wind and solar industries.22 The State Council’s National Medium and Long-Term Science and Technology Development Program (MLDP) – published in 2006 and the dominant roadmap for the PRC’s scientific, technological, and industrial development during that period – listed energy first among its key industries and developing the solar industry23 as a priority within the energy industry.24 “Energy has a particularly important strategic position in the national economy.”25

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This high-level prioritization was borne out in more concrete policy that incentivized, and created the conditions for, Chinese solar manufacturers to overtake, notably the 2005 “Renewable Energy Law” and 2007 “Medium and Long-Term development Plan for Renewable Energy.”26 These policies ensured that Chinese companies benefited from direct subsidies; indirect subsidies in the form of low-cost land and energy, tax breaks, and low-interest loans; and, more generally, from a systemically-undervalued currency that let Chinese exporters sell at dramatically lower prices than their international competitors.

All of those efforts were sufficient for the Chinese PV industry to position not only as the new but also as the big kid on the block by 2008. That year, Chinese companies made up about one third of global PV cell production and one quarter of global PV production generally.27 Then, the financial crisis hit.

The 2008 financial crisis devastated the nascent global solar industry. That imposed immediate costs on China’s economy, with it the Chinese solar sector. But the financial crisis imposed greater costs on those of the world beyond China’s borders. This created opportunity for Beijing. On the one hand, overseas export markets for Chinese solar products shriveled. On the other hand, so did the operations of China’s global competitors. In crisis, the Chinese solar energy industry faced new opportunity. And Beijing set about to capitalize on it.28 In 2009 PRC government support for the solar PV industry kicked into a new, high gear.29 Beijing issued a fresh package of industrial support policies in response to the global financial crisis. These included recovery packages for provinces that provided low-cost financing from the China Development Bank and prioritized solar PV manufacturing, among other industries.30 They also included efforts to prop up the domestic market to compensate for overseas markets drying up. For example, the “Golden Sun Project” – launched by the Ministry of Finance, Ministry of Science and Technology, and the National Energy Administration – constituted some 10 billion RMB in subsidies for the PV industry and “the strongest industrial policy support in the history of China’s PV industry.”31 These government measures also reflected a transformation in how Beijing approached the solar PV industry. Beijing’s solar policy after the financial crisis evolved from targeting wafers, cells, and modules to targeting the entire solar supply chain. The goal wasn’t just capacity or economic return. The goal was control – and control over a new energy source.

CONTROLLING THE VALUE CHAIN: 2010-2018 The financial crisis changed the velocity with which Beijing approached its industrial development: The challenges facing the Western world, and corresponding industrial shrinkage, granted the Chinese Communist Party an opportunity to acquire international industrial resources and seize global market share. As Ke Yanqing of the Chinese Academy of Sciences wrote in 2019, “the sub-

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prime mortgage crisis in 2008 brought great shock to the world economy. But it provided opportunities for China.”32 Renewable energy, and solar energy in particular, were priorities in this effort. In 2010, the State Council published a first set of “strategic emerging industries;” key future fields on which Beijing would focus its competitive industrial policy. Those included the next generation information network, aviation equipment, biomedical, biomass, and new energy vehicle industries. They also included the solar industry.33 The Chinese Communist Party had entered a new stage of aggressive industrial offense – and the solar industry was at the top of the docket.

Beijing’s new prioritization of the PV industry also came with a new scope: Before the financial crisis, Beijing had primarily targeted the wafer, cell, and module steps of the solar value chain. The PRC’s post-financial-crisis solar policy sought not just to dominate manufacturing at those steps, but to control the industry chain – all the way from upstream inputs (e.g., polysilicon) to markets.

China’s pre-2009 effort to capture the midstream of the solar value chain had worked. China had become the world’s largest wafer, cell, and module producer. But China still depended on the rest of the world for upstream inputs, namely polysilicon, and for a market. That left Chinese module manufacturers at the mercy of polysilicon prices and reliant on foreign buyers. Per a 2022 CITIC report: Because China’s photovoltaic industry at that time [the 2000s] was basically concentrated on the module part… it was difficult to claim the main profits of the industry chain from the outside world.

The 2008 financial crisis underscored the risks of such a position: As overseas markets dwindled, so too did the fortunes of Chinese module makers. As a People’s Daily article from September 2009

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put it, China had to fix the problem of “being outside both ends.”34 Accordingly, the second phase of China’s solar energy industrial policy focused on establishing control all across the solar value chain – from polysilicon to solar cells – and building out a domestic market, for domestic companies.

This approach promised independence for solar producers: They would no longer have to rely on foreign sources of polysilicon; nor would their sales be entirely bound to domestic customers.

(Instead, the rest of the global industry would rely on China.) And independence promised leverage: The ability to shape prices, set standards, and influence technological development.

The Golden Sun project subsidized domestic PRC PV manufacturing companies and PV installations, therefore establishing a domestic PV market. It provided national and local-level subsidies to grid connected and off-grid solar PV power generation projects, with national-level subsidies covering some 70 percent of installation costs for off-grid PV systems. The project also included subsidies for “key PV power generation technologies,” including silicon material and control inverters.35 These support measures were effectively reserved for domestic companies. Though foreign ones were allowed to participate if they partnered with the right State-owned Enterprise or champion company – and therefore facilitated transfer of advanced technology to China.36 At the same time, the CCP invested in growing, and subsidizing, upstream nodes of the solar energy value chain. Beijing used financing from the China Development Bank, tax breaks, and subsidies – which focused on lowering energy costs of energy-intensive industries – to build its polysilicon production capacity. In 2012, the Ministry of Industry and Information Technology (MIIT) released the 12th Five Year Plan for the Solar Photovoltaic Industry. Its first “development focus” was “high purity polysilicon;” its second “silicon ingots and silicon wafers.”37 After those came crystalline silicon batteries, thin film batteries, and solar cells.38 Alongside these direct support measures, Beijing also established indirect policies designed to prop up its upstream companies. These included relaxing environmental and other regulatory restrictions on the solar industry such that the highly-energy intensive industry could thrive, despite related environmental and energy costs. For example, in 2012, Beijing implemented “differentiated industrial policies” in Xinjiang that relaxed regulatory restrictions on cement, steel, electric power, coal chemical, and polysilicon industries. In other words, large-scale polysilicon production could be built in Xinjiang, fueled not only by coal and other emissions-heavy energy sources but also by subsidized coal and other emissions-heavy energy sources. This prompted a boom in polysilicon production, as well as other heavy industry, in Xinjiang; as of 2020, more than 50 percent of PRC polysilicon production took place in the region.39 And Beijing took pains to insulate its government-supported industry. In 2010 and 2011, Beijing began tariffing polysilicon imported from Korea and the United States, thus building trade barriers to ensure that the Chinese solar industry would be fed by a Chinese polysilicon industry.40 These efforts worked. Fueled by subsidies, low-cost (and dirty) energy, an artificial domestic market, and continuing intellectual property theft,41 China’s solar energy industry swelled, across

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all nodes of the value chain. In 2010, China held about 30, 80, 60, and 50 percent of global market share for polysilicon, wafers, cells, and modules respectively – and made up less than 5 percent of global demand. By 2015, those figures were about 45, 80, 65, and 30. They have continued to grow to the present, such that today, China controls over 85 percent of global solar PV manufacturing capacity, dominating at every node of the value chain, with a production capacity that is more than twice its share of global demand.42

GLOBAL MARKET SHARE OF PV CELL PRODUCTION BY COUNTRY, 2006–201343

Beijing developed this stranglehold over the global solar PV industry through non-market means.

Those weren’t hidden. And they were quickly recognized. The international community realized the non-market measures fueling China’s solar industrial policy – and the risks that those presented to the rest of the global industry – early in phase two of the PRC’s solar campaign.

In 2011, with artificially cheap Chinese solar products forcing US manufacturers out of the market, SolarWorld Industries led a coalition of US companies in filing a trade complaint against the PRC. In 2012, the US Department of Commerce levied tariffs on Chinese solar manufacturers under antidumping and countervailing duty (AD/CVD) laws.44 And in 2014, a US grand jury indicted five Chinese military personnel for cyber-attacks and economic espionage directed at SolarWorld – as well as other US companies (e.g., US Steel, Alleghany Technologies Inc) – in part in response to the trade case.45 But tariffs and indictments can only work so well against a well-armed, market-meddling authoritarian player intent on overtaking in a strategic industry. Faced with tariffs, Beijing upped its state support. And Beijing also found the loopholes. As early as 2012, Beijing was laying the info@horizonadvisory.org

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foundation for what would become over a decade of evasion and manipulation of US trade regulations defined by lobby, pressure, and influence campaigns to obtain waivers and other exemptions; transshipment through third countries; and investment in production – or, in many cases, just assembly – facilities in third countries.46 This PRC effort only continued, and continued to succeed, after Washington responded with amended tariffs in 2015. In one of their more glaring oversights, those updated tariffs continued not to account for the PRC processing in and transshipping its products through third countries (e.g., Southeast Asian countries, Taiwan).47 In 2018, Washington began to take new, concerted action against China’s industrial offensive. Thus began a third phase in China’s solar energy campaign. This one has been defined not by change in competitive trends, the PRC’s ambitions, or the PRC’s approach; rather by consistent PRC success in evading, and in some cases even profiting from, US attempts to respond.

CONTINUED DOMINANCE: 2018-PRESENT Today, more than 85 percent of the world’s solar PV production takes place in China; if Chineseowned production outside of the country is accounted for, that figure is closer to 95 percent.48 PRC manufacturing dwarfs that of any other country at every step of the solar value chain.

This doesn’t just grant Beijing supply chain control. It also grants the PRC leverage over the markets, political economic forces, and technological trends tied to and dependent on the growing solar industry. Over the past decade, US solar industry organizations have consistently opposed trade regulations against China’s non-market policies, likely because their dependence on Chinesemade products binds them to the PRC’s interests.49 Beijing’s control over global solar production has also allowed the Chinese Communist Party to shape the sector’s technological trajectory.

Through national and international standards organizations50 as well as commercial engagement, the Chinese government and government-backed companies have worked to define international technical standards around the solar PV industry.51 At the same time, the Chinese system has also integrated its information technology (IT) giants into the solar PV industry, making them – and their IT systems – critical players in the global market: For example, since 2012, China’s Huawei has been integrating digital information technology into solar products. As of 2022, Huawei and Sungrow, two Chinese government-backed companies, have become the world’s leading providers of PV inverters and major players in smart energy management.52 Huawei stopped selling inverters into the US market in 2019; Sungrow not only sells into the US but also has a US-based operation. The company is deeply connected to PRC industrial policy and the Chinese government: Sungrow has been recognized by the Ministry of Industry and Information Technology (MIIT), a leading PRC government organ in implementing the military-civil fusion strategy, as a “single champion,” or a specialized enterprise with outsized global market share. Sungrow also operates a National Industrial Design Center, a National Hightech Industrialization Demonstration base, and a National Enterprise Technology Center. The company has won the China Industry Award. Sungrow’s Chairman was elected as a representative of the 13th National People's Congress.53

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As the Director of the Electronic Information Department of China’s MIIT put it in 2021: After more than ten years of development, the photovoltaic industry is one of the few strategic emerging industries in China that can simultaneously participate in international competition and is expected to gain competitive advantages… It is one of the few strategic emerging industries in China that has gained global popularity, achieved end-to-end independent control, and is expected to achieve high-quality development.54 THE US RESPONDS

In the late 2010s, the extent of China’s industry control and related risks – in solar and more generally – prompted a new wave of defensive measures on the part of the United States. In 2018, Washington imposed “safeguard” tariffs on Chinese solar equipment under Section 201 of the Trade Act of 1974. The same year, Washington imposed additional 25 percent tariffs on solar and many other Chinese imports under Section 301 of the 1974 Trade Act. In 2021, as awareness over Beijing’s human rights atrocities in the Xinjiang Region – and that region’s dominant role in Chinese polysilicon production – grew, President Biden signed the Uyghur Forced Labor Prevention Act into law. More than half of the PRC’s polysilicon production takes place in Xinjiang, the site of the CCP’s genocide against the Uyghur minority; that amounts to almost half of the world’s supply.55 The UFLPA sought to stop the import of goods made in Xinjiang, including polysilicon and products made out of that polysilicon, into the United States, unless those could be proven to be free of forced labor.

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And a newly energized Washington tried to play offense, too. The multi-billion-dollar Inflation Reduction Act, signed into law in 2022, sought to provide government funding for clean energy manufacturing in the United States – and in so doing both to lessen dependence on China and to develop renewable energy production.56 In short, the Act sought to create the conditions for domestic solar, and other new energy, production to thrive even in a market distorted by Beijing.

But neither defense nor offense has worked. Despite US tariffs and other trade measures, Chinesemade solar products continue to flood the US markets at prices that stymy alternatives. Despite the billions of IRA dollars, only one solar wafer facility is currently under construction in the United States; most announced IRA investments focus on assembly of solar modules, with more than half of those investments being made by Chinese-headquartered companies. China’s stranglehold over the global solar industry – with it, US companies and US energy security – has only grown. So too have the nonmarket measures Beijing has used to fuel that stranglehold.

CHINA CONTINUES TO DOMINATE

As of 2022, China controls over 85 percent of global solar PV manufacturing capacity, including more than 85 percent of module, 86 percent of cell, and 97 percent of wafer and ingot production.

And those figures only account for production in China: 99.4 percent of PV wafers are made by Chinese companies.57 Between 2021 and 2023, China’s module exports more than doubled. Despite both defensive and proactive policies, it remains cost-prohibitive to produce solar products outside of China.

No non-PRC major economy’s production at any node the solar module supply chain is sufficient to meet its domestic annual installation demand – now, let alone in the future. The US, for example, while close at the polysilicon and module stages of the value chain, produces no wafers or cells. Europe is similarly positioned. By comparison, China produces, at every stage of the solar module value chain, some five to six times what is required for its domestic installations. And China’s current production capacity is two times global demand.58 This imbalance responds to an economic reality that persists despite US and other international policy efforts: In a market distorted by the PRC, PV manufacturing does not make money. In 2010, the revenue generated from US PV deployment and manufacturing was roughly equivalent. In 2022, that of deployment was some 36 times that of manufacturing.59 PRC companies are continuing to invest in new production, too. At least ten Chinese polysilicon manufacturers have initiated projects to expand their production capabilities since 2022, for example, to the tune of approximately two million metric tons (MT) – most of it in Xinjiang and Inner Mongolia. (This despite the Uyghur Forced Labor Prevention Act’s effort to prohibit the import of Xinjiang-made polysilicon into the United States.) And China’s ingot, wafer, cell, and module production are expected to grow some 173, 196, 257, and 189 percent by 2027.60

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And Chinese companies are consolidating: A 2023 Chinese article describes Longi Solar, Trina Solar, JA Solar, JinkoSolar, and Canadian Solar as the PRC’s top five solar cell manufacturers – and notes that they are all focused on vertical integration strategies; Trina Solar in June 2022 announced that it would invest in the construction of the Qinghai Xining Zero Carbon Industrial Park to embrace vertical integration.61 The PRC’s bloated solar PV industry continues to be fueled by government backing, and growing government backing at that. In its 2022 annual report, JinkoSolar reported more than 1.3 billion RMB in government subsidies, up from about 758 million RMB in 2021. That 2022 subsidy figure constituted approximately 50 percent of the company’s 2.6 billion RMB net profit. Longi Solar and Trina Solar each disclosed about 500 million RMB in government subsidies, up from less than 375 million in 2021 and constituting 18 and 15 percent of their profit, respectively. These subsidies include solar PV-focused funds, more general industrial support measures, and backing for participating in PRC government science and technology projects.62

PROJECTED CHINESE PV PRODUCTION CAPACITY, 2022-2027 (GW)63

Disclosed PRC Government Subsidies to Top Four Solar PV Manufacturers, 2021 and 202264 2022 Reported Subsidies

2022 Subsidies as a Share of Profit65

2021 Reported Subsidies

2020 Reported Subsides

Longi Solar

472,455,888

18%

358,262,982

302,808,294

Trina Solar

530,982,064

15%

372,774,208

138,308,726

JA Solar

339,784,651

6%

210,897,386

169,691,317

JinkoSolar

1,320,145,846

50%

758,658,408

247,698,910

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In addition to direct subsidies, the PRC government continues to provide additional, indirect support (e.g., tax incentives) for solar production – and regions like Xinjiang continue to offer lowcost access to energy sources like coal (as well as corresponding low environmental regulations).

The PRC’s solar PV industry hasn’t simply continued to grow at home. It has also expanded internationally, including in the United States. Companies commonly grouped as Chinese companies – Canadian Solar, JA Solar, Longi Solar, and Trina Solar – all have PV factories under construction in the United States. Hounen Solar and JinkoSolar have also each announced one. And Chinese companies are building new PV facilities in Germany, India, the Middle East, and Vietnam.66 These overseas facilities reflect the PRC’s growing control over the solar PV industry despite US efforts to respond. They are also examples of how China has managed that feat. Chinese solar companies continue to export into the US from subsidiaries across Southeast Asia – including Cambodia, Indonesia, Malaysia, Vietnam, and Thailand – in order to evade US tariffs and other trade barriers. As the US imposes more such defenses, Chinese companies simply build more footprints abroad to avoid them.

To some extent, Chinese companies’ footprints in the United States serve the same purpose. But there is injury to add to injury in their case: The spike in Chinese investments in US-based facilities is driven in large part by Chinese efforts to take advantage of the Inflation Reduction Act (IRA) – a US-taxpayer-funded program intended precisely to shore up dependence on China. After the IRA passed, Chinese PV companies immediately began investigating opportunities to enter the US market, whether through joint ventures or directly.67 For example, China’s Longi Solar plans to partner with US developer Invenergy to develop a 5 GW US solar factory in Ohio; that effort would benefit from IRA tax credits. In total, based on already-announced solar projects in the US, Chinese companies are projected to benefit from some 125 billion USD in federal tax credits under the IRA.68 OWN GOAL

In part, China’s continuing success in monopolizing the global solar PV industry is a function of canny evasion and manipulation of US defenses – transshipping through third-party countries, for example, and using indirect subsidies like cheap coal. But China’s success has also been a function of feckless US policy; efforts that are riddled with loopholes from inception, failures of enforcement, and exemptions encouraged by political and economic interests that themselves depend on Beijing.

The 2018 201 tariffs on China’s solar products, for example, were largely neutered due to exemption of bifacial solar panels and a high quota on what could be imported without tariffs. In 2022, the Biden Administration imposed a two-year moratorium on anticircumvention tariffs on imports of solar cells and modules from Cambodia, Malaysia, and Vietnam. This moratorium holds even after a Department of Commerce probe found that Chinese producers were indeed evading US tariffs by shipping products through those third-party countries, which make up some 80 percent of US panel supplies.69 Enforcement of the UFLPA continues to be scattershot, at best. And the Inflation Reduction Act – the flagship US industrial policy, the multi-billion-dollar, taxpayer-funded

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effort to restore US production and resolve dependence on China in strategic industries – has no provisions in it to prevent Chinese companies from doing precisely what they’re doing: Reaping its benefits, to cement their dominance. This means that US policy risks supporting continued PRC market distortion. It also prevents non-PRC companies from competing; tax incentives do little to level the playing field if they do not support production, and have requirements for domestic content, all across the value chain.

US MODULE TARIFF ENFORCEMENT, BY CATEGORY AND YEAR70

NON-TARIFFED US SOLAR MODULE IMPORTS, PERCENT

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This is the third and current phase of the PRC’s solar industry campaign. In this phase, the Chinese approach, standing, and trendlines have remained constant: Beijing continues to leverage nonmarket means to control of the entire solar PV industry, and with it a new generation of energy. The question of this phase is whether two decades into Beijing’s solar energy offensive, the United States is able to respond – and to respond not just with headlines and statements, but with robust, enforceable and enforced policy that protects the industry from Chinese distortions, gives domestic players a chance to succeed, and resolves a generational threat to American energy security.

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THE COST OF A MISSED OPPORTUNITY The risks associated with China’s control over – and ambitions for – the solar energy industry are enormous. Therefore, so are the stakes for the United States of getting the challenge right. The world is moving toward a new energy era. That era promises economic boons for those who can capitalize on it. It also promises to change the nature of energy geopolitics and security. If Beijing is able to cement control over the solar industry, Beijing will be able to control the economic fruits of a key, emerging industry and control critical international energy resources. Beijing will also have established a path – based on non-market and environmentally-unfriendly methods – for controlling the larger basket of strategic industries, including renewable energies, that it has prioritized. Rebuffing Beijing’s solar energy gambit matters for US national and economic security; for clean energy ambitions; and, more generally, for setting a precedent with respect to free markets and trade.

Beijing’s control over the solar energy industry threatens US energy security. It risks making the United States dependent, and dependent on an adversary, for a strategic, future energy source. That adversary is one that has consistently shown its willingness to weaponize supply chain reliance for coercive effect.71 Beijing’s control over the solar energy industry also threatens US economic security. The current market value of the solar industry is approximately 200 billion USD. That number is projected to more than triple by 2030. Over the last ten years, the industry has experienced an average annual growth rate of 24 percent.72 As things currently stand, those dollars, and that growth, will go to Chinese companies and the Chinese government.

The same holds for jobs: In 2021, photovoltaics accounted for some 4.29 million of the world’s 12.7 million jobs in clean energy. But those jobs go where the production is. Of the 4.29 million global solar PV industry jobs, some 2.7 million were in China, up from 2.3 million in 2020 – compared to 250,000 in the United States.73 In other words, the growth in Chinese solar PV industry jobs between 2020 and 2022 alone was greater than the total number of solar energy jobs in the United States.

The Chinese Communist Party’s own approach to and concern over energy security underscores the nature of this threat. Beijing has long seen dependence in conventional energy sources as a strategic weakness. As a result, the CCP has prioritized renewable energies, including and especially solar, as a means both to shore up dependence on foreign players and to flip that dependence on its head; to ensure not only that China does not supply on the outside world for energy but also that the outside world relies on China. As the Notice of the General Office of the State Council on Issuing the Energy Development Strategic Action Plan (2014-2020) put it: Energy is the foundation and driving force of modernization. Energy supply and security are related to the overall situation of China’s modernization… Insist on using domestic supply

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as the main channel to ensure energy security, and firmly grasp the initiative in energy security.74 And, from the China Academy of Engineering Industry Planning Network: For a long time, the energy required for China’s economic development has been in a tight balance between supply and demand, and China’s dependence on external energy has increased. which constitutes an unfavorable trend for China’s energy security… Only by continuing to improve the system construction of new energy development and breaking through technical bottlenecks and obstacles can we fully tap the potential of new energy, effectively adjust the traditional energy structure, and achieve the goal of energy security.75 Now, Beijing threatens to place the United States, and the rest of the world, in precisely the position that it itself has sought to escape.

Nor is industrial control of the sort that China has something that can be reversed overnight, when the economic, security, or strategic imperative of doing so becomes apparent. Beijing risks capturing foundational and full-spectrum positioning that is difficult, if not impossible, to reverse.

The CCP’s strength all along the solar value chain gives it pricing power. If new players emerge to challenge China in polysilicon, for example, Beijing can simply crater prices to drive them out of business. And if new players emerge to challenge China in wafers? The same approach works, of course – and Beijing can restrict their access to upstream inputs.

The CCP’s industrial dominance also lets it shape the technological trajectory of the industry, in its interest. Chinese companies can set standards – either via standard-setting organizations or through de facto adoption of them – that privilege Chinese technologies. And considering its dependence on China, the rest of the industry is unlikely to resist. How might this manifest, concretely? Chinese companies might define technical standards to shift the industry toward monocrystalline silicon wafers, where China controls a whopping 97.5 percent of the market.76 Or Chinese companies might push smart energy management technical standards that favor Huawei technology.

Such Chinese technological influence comes with an acute security risk. Solar panels are not just dumb slabs of heavily treated polysilicon. They are also connected devices: Energy grids are increasingly informatized, regulated and operated through information technology – and connected to other information technology networks. Reliance on Chinese solar companies therefore risks introducing Chinese IT inputs into critical US infrastructures, and therefore giving the Chinese government access to information on US energy grids as well as the ability to disrupt those energy grids.

This risk is underscored by the reality that Chinese military-tied and military-civil fusion act0rs play a role in the country’s solar industry. For example, China’s TC90 National Solar Photovoltaic Energy System Standardization Technical Committee – the committee responsible for formulating

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Chinese national PV standards as well as engaging with international counterparts – was established by the Ministry of Industry and Information Technology (MIIT), the PRC government entity charged with implementing military-civil fusion, and with its secretariat affiliated to the 18th Research Institute of China Electronics Technology Group Corporation.77 China Electronics Technology Group Corporation is a Chinese State-owned military company. And Huawei, a Chinese military-civil fusion champion, is the world’s leading provider of photovoltaic inverters and a major player in smart energy management.78 Then, there is the – perhaps counterintuitive – environmental cost of China’s solar dominance.

Beijing has fueled its solar PV industry’s growth not only with subsidies, but also with low-cost, high-emission energy. Polysilicon, for example, is a highly energy-intensive industry. Beijing built its polysilicon industry by encouraging companies to set up facilities in regions like Xinjiang that had ready reserves of coal and other low-cost energy – and where the government had relaxed environmental regulations. The Chinese photovoltaic supply chain is powered by coal and is about 20 percent more energy-intensive than the global average.79 Finally, China’s industrial offensive neither ends at nor begins with solar. Beijing pursues a nonmarket, industrial policy that runs contrary to international law and norms – and that is intended to establish global dependence on China for the sake of developing Chinese global, coercive leverage.

In the process, Beijing weaponizes cooperation and fuses military with civilian. Solar is a critical front in a much larger, and much more dangerous competition. It could set a dangerous precedent for the United States. It also presents an opportunity for the United States to defend itself and the global system. Building reliable domestic supply chains in the solar industry would directly support parallel efforts in other, connected industries: Semiconductors, for example, also rely on silicon as an upstream input. More generally, success in the solar PV industry would provide a playbook for responding to the PRC’s non-market measures across the basket of strategic industries.

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BUILDING A CLEAN, TRUSTED SOLAR SUPPLY CHAIN The solar industry is still taking shape to meet the moment of today’s energy transition. The United States still has the chance still to capitalize on this strategic industry; to restore domestic industrial capacity; and to break dependence on China. In doing so, the United States can set a precedent for upholding free markets and trade to be replicated across strategic industries. And the US can set a precedent for ensuring that renewable energy sectors remain environmentally responsible all along the value chain.

But such an effort will demand new policy tools and the strengthening of new ones. In order to seize the strategic, economic, and environmental opportunity of the solar industry – and, more generally, to compete with China – the United States must: ●

Maintain 201 and 301 tariffs on Chinese solar products and strategically manage both exclusions and exemptions for those inputs that will gradually permit the re-shoring of a domestic production base;

●

Strengthen enforcement of the Uyghur Forced Labor Prevention Act;

●

End the moratorium on anti-dumping and countervailing duties on solar cells and modules from Southeast Asia – and apply retroactive tariffs;

●

Update the Tariff Act of 1930 in accordance with the Leveling the Playing Field 2.0 Act;

●

Update the scope of investment review to cover greenfield investment and joint ventures, while prioritizing new energy and related investments for notified and non-notified review;

●

Strengthen the Inflation Reduction Act to prevent foreign entities of concern – namely and especially China – from benefiting from its tax credits and other support measures;

●

Strengthen the Inflation Reduction Act to include domestic content requirements – covering material inputs, project equipment, and IT equipment – for production and investment tax credits.

●

Expand production tax credits for new energy – with specific prioritization of upstream inputs, domestic content requirements, and prohibitions on foreign entities of concern – to match investment tax credits;

●

Expand covered materials of the oil depletion allowance to include upstream inputs for new energy;

●

Introduce carbon border adjustments for Chinese goods – accounting for the upstream emissions of their inputs.

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Across the board, the United States must change how it thinks about new energy. Today’s energy revolution is not just about adoption of renewables. It is also about production of renewables – and clean, secure, trusted production of those. Until that is part of the American calculus, the country risks relinquishing national and economic security, an enormous industrial opportunity, legitimately green production, and say in tomorrow’s technology.

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ENDNOTES 1 “Renewable energy jobs hit 12.7 million globally,” International Labor Organization, September 22, 2022.

https://www.ilo.org/global/about-the-ilo/newsroom/news/WCMS_856515/lang--en/index.htm 2 “PV Supplier Market Intelligence Program Q2 2023,” Clean Energy Associations 3 “How will China’s expansion affect global solar module supply chains?” Wood Mackenzie, October 2023.

4 See, for example, Keith Bradsher and Hiroko Tabuchi, “China Is Said to Halt Trade in Rare-Earth Minerals with Japan,” The New

York Times, September 24, 2010.

5 Sheldon Kimber, “Why Solar Cost Declines Were a Lie... Sort Of,” Intersect Power, November 28, 2023.

6 Michael Stumo, “Will the Inflation Reduction Act Benefit American or Chinese Solar Companies?” August 15, 2023.

https://prosperousamerica.org/will-the-inflation-reduction-act-benefit-american-or-chinese-solar-companies/.

7 “PV Supplier Market Intelligence Program Q2 2023,” Clean Energy Associations 8 “赵颖君 | 我国光伏产业如何继续保持领先优势 [Zhao Yingjun | How does my country’s photovoltaic industry continue to maintain its

leading edge?],” China International Engineering Consulting Corporation, August 2023.

9 “How will China’s expansion affect global solar module supply chains?” Wood Mackenzie, October 2023.

10 “How will China’s expansion affect global solar module supply chains?” Wood Mackenzie, October 2023.

11 “赵颖君 | 我国光伏产业如何继续保持领先优势 [Zhao Yingjun | How does my country’s photovoltaic industry continue to maintain

its leading edge?],” China International Engineering Consulting Corporation, August 2023.

12 “国务院办公厅关于印发能源发展战略行动计划（2014-2020 年) [The General Office of the State Council issued the Energy

Development Strategic Action Plan (2014-2020)],” State Council, 2014.

13 Seaver Wang, Suzel Lloyd, and Guido Núñez-Mujica, “Sins of a Solar Empire,” Breakthrough Institute, November 15, 2022,

https://thebreakthrough.org/issues/energy/sins-of-a-solar-empire.

14 Yuan Ying, "扭曲的'金太阳'工程 [The Twisted 'Golden Sun' Project]," China Dialogue, April 14, 2011.

15 For example, Longi Solar has received PRC government subsidies including “special funds for industrial and information

development to build 5GW monocrystalline silicon ingots,” “functional development of single crystal silicon growth digital platform for big data integration and analysis,” “fixed asset investment subsidies,” and “national robotics project” funding. PRC solar companies also benefit from and support formal PRC industrial policy programs. For example, Sungrow operates a National Industrial Design Center and has been recognized as a “single champion” by the PRC’s Ministry of Industry and Information Technology.

16 Figures are sourced from company annual statements published in 2023.

17 The profit figure used is net profit after deducting non-recurring gains and losses.

18 “2023 版中国光伏行业发展前景预测报告 [2023 version of China’s photovoltaic industry development prospect forecast report],”

Zhiyan Consulting, July 11, 2023. https://www.bilibili.com/read/cv24935368/.

19 David Hart, “The Impact of China’s Production Surge on Innovation in the Global Solar Photovoltaics Industry,” Information

Technology and Innovation Foundation, October 5, 2020. https://itif.org/publications/2020/10/05/impact-chinas-productionsurge-innovation-global-solar-photovoltaics/.

20 See, for example, Herman Trabish, "GT Advanced Technologies’ Plan to Rewire Solar Modules," Green Tech Media, March 26,

2014.; Daniel Seeger, “Meyer Burger goes to Chinese court for patent infringement,” PV Magazine, February 7, 2018. https://www.pv-magazine.com/2018/02/07/meyer-burger-goes-to-chinese-court-for-patent-infringement/.

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21 David Hart, “The Impact of China’s Production Surge on Innovation in the Global Solar Photovoltaics Industry,” Information

Technology and Innovation Foundation, October 5, 2020. https://itif.org/publications/2020/10/05/impact-chinas-productionsurge-innovation-global-solar-photovoltaics/.

22 中华人民共和国国民经济和社会发展第十个五年计划纲要 [Outline of the Tenth Five-Year Plan for National Economic and Social

Development of the People's Republic of China], March 15, 2001.

23 Including, specifically, “cost-effective solar photovoltaic cells.” (National Medium and Long-Term Science and Technology

Development Program (2006-2020) [国家中长期科学和技术发展规划纲要 (2006-2020)], 2006.)

24 The MLDP also effectively describes the PRC emphasis on building its energy industry on foreign resources: “Strengthen the

digestion, absorption, and re-innovation of imported technologies for energy equipment.” National Medium and Long-Term Science and Technology Development Program (2006-2020) [国家中长期科学和技术发展规划纲要 (2006-2020)], 2006.)

25 National Medium and Long-Term Science and Technology Development Program (2006-2020) [国家中长期科学和技术发展规划

纲要 (2006-2020)], 2006.

26 Examples include the Renewable Energy Development Promotion Law and Preferential Tax Policies for Renewable Energy.

(“The Tenth Five Year Plan for Economic and Social Development of the People’s Republic of China,” The International Energy Association, April 2021. https://www.iea.org/policies/1736-the-10th-five-year-plan-for-economic-and-social-development-ofthe-peoples-republic-of-china-2001-2005) 27David Hart, “The Impact of China’s Production Surge on Innovation in the Global Solar Photovoltaics Industry,” Information

Technology and Innovation Foundation, October 5, 2020. https://itif.org/publications/2020/10/05/impact-chinas-productionsurge-innovation-global-solar-photovoltaics/; “2008 Solar Technologies Market Report,” US Department of Energy. https://www.nrel.gov/docs/fy10osti/46025.pdf But at that point, China had not managed to develop equivalent footholds in the upstream of the solar industry, namely polysilicon: In 2008, China imported about 75% of its polysilicon from the United States and Europe. (Special Report on Solar PV Global Supply Chains, International Energy Agency, August 2022. https://iea.blob.core.windows.net/assets/d2ee601d-6b1a-4cd2-a0e8db02dc64332c/SpecialReportonSolarPVGlobalSupplyChains.pdf) 28 “When the Iron Is Hot: The Chinese Communist Party’s Subversion of US Recovery Investment,” Horizon Advisory, June 2020;

“Viral Moment: China’s Post-COVID Planning,” Horizon Advisory, March 2020.

29 This was right after the US passed the American Recovery and Reinvestment Act (ARRA), with a host of clean energy

incentives; the Chinese government support overwhelmed the American effort.

30 “Special Report on Solar PV Global Supply Chains,” International Energy Agency, August 2022.

https://iea.blob.core.windows.net/assets/d2ee601d-6b1a-4cd2-a0e8db02dc64332c/SpecialReportonSolarPVGlobalSupplyChains.pdf 31 Yuan Ying, "扭曲的'金太阳'工程 [The Twisted 'Golden Sun' Project]," China Dialogue, April 14, 2011.

32 Ke Yanqing, “ 新经济形势下的中国企业海外并购分析 [Analysis of Chinese enterprises' overseas mergers and acquisitions under

the new economic situation],” Economic Research Guide, 2019 33 David Hart, “The Impact of China’s Production Surge on Innovation in the Global Solar Photovoltaics Industry,” Information

Technology and Innovation Foundation, October 5, 2020. https://itif.org/publications/2020/10/05/impact-chinas-productionsurge-innovation-global-solar-photovoltaics/ 34 "光伏产业，为何热闹 3 年就'过剩' [Why is the photovoltaic industry 'surplus' after only three years of activity?]," People's Daily,

September 17, 2009. And from the 2012 12th Five Year Plan for the Solar Photovoltaic Industry, “most solar cell products are exported to overseas markets and industrial development is impacted by the financial crisis and changes in overseas markets.” (“’太 阳能光伏产业’十二五’ [Solar Photovoltaic Industry ‘Twelfth Five-Year Plan’ Development Plan],” Ministry of Industry and Information Technology, February 2012.)

35关于实施金太阳示范工程的通知 [Notice on the Implementation of the Golden Sun Demonstration Project], 2009.

https://www.gov.cn/zwgk/2009-07/21/content_1370811.htm/.

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36 David Hart, “The Impact of China’s Production Surge on Innovation in the Global Solar Photovoltaics Industry,” Information

Technology and Innovation Foundation, October 5, 2020. https://itif.org/publications/2020/10/05/impact-chinas-productionsurge-innovation-global-solar-photovoltaics/.

37 “’太阳能光伏产业’十二五” [Solar Photovoltaic Industry ‘Twelfth Five-Year Plan’ Development Plan], Ministry of Industry and

Information Technology, February 2012.

38 Ibid.

39 “Traced to Forced Labor: Solar Supply Chains Dependent on Polysilicon from Xinjiang,” US Department of Labor.

https://www.dol.gov/sites/dolgov/files/ILAB/images/storyboards/solar/Solar.pdf 40 “Special Report on Solar PV Global Supply Chains,’ International Energy Agency, August 2022.

https://iea.blob.core.windows.net/assets/d2ee601d-6b1a-4cd2-a0e8db02dc64332c/SpecialReportonSolarPVGlobalSupplyChains.pdf.

41 See, for example, Daniel Seeger, “Meyer Burger goes to Chinese court for patent infringement,” PV Magazine, February 7,

2018. https://www.pv-magazine.com/2018/02/07/meyer-burger-goes-to-chinese-court-for-patent-infringement/ 42 “Special Report on Solar PV Global Supply Chains,” International Energy Agency, August 2022.

https://iea.blob.core.windows.net/assets/d2ee601d-6b1a-4cd2-a0e8db02dc64332c/SpecialReportonSolarPVGlobalSupplyChains.pdf.

43 David Hart, “The Impact of China’s Production Surge on Innovation in the Global Solar Photovoltaics Industry,” Information

Technology and Innovation Foundation, October 5, 2020. https://itif.org/publications/2020/10/05/impact-chinas-productionsurge-innovation-global-solar-photovoltaics/ 44 Keith Bradsher and Diane Cardwell, “U.S. Slaps High Tariffs on Chinese Solar Panels,” The New York Times, May 18, 2012.

https://www.nytimes.com/2012/05/18/business/energy-environment/us-slaps-tariffs-on-chinese-solar-panels.html; Lilly Yejin Lee and Noah Kaufman, “Q&A | Solar Tariffs and the US Energy Transition,” Center on Global Energy Policy at Columbia, November 13, 2023. https://www.energypolicy.columbia.edu/qa-solar-tariffs-and-the-us-energy-transition/.

45 “First Time Criminal Charges Are Filed Against Known State Actors for Hacking,” US Department of Justice, May 19, 2014.

https://www.justice.gov/opa/pr/us-charges-five-chinese-military-hackers-cyber-espionage-against-us-corporations-and-labor.

46 In 2012, for example, the marketing director of JinkoSolar noted that her company would shift productions sites to Canada to

avoid US tariffs. (Keith Bradsher and Diane Cardwell, “U.S. Slaps High Tariffs on Chinese Solar Panels,” The New York Times, May 18, 2012. https://www.nytimes.com/2012/05/18/business/energy-environment/us-slaps-tariffs-on-chinese-solar-panels.html).

47 Lilly Yejin Lee and Noah Kaufman, “Q&A | Solar Tariffs and the US Energy Transition,” Center on Global Energy Policy at

Columbia, November 13, 2023. https://www.energypolicy.columbia.edu/qa-solar-tariffs-and-the-us-energy-transition/.

48 Katharina Buchholz, “China Dominates All Steps of Solar Panel Production,” Statista, April 2021. E 49 Throughout the 2010s, US solar industry organizations opposed trade regulations against China’s non-market policies, likely

because their dependence on Chinese-made products bound them to the PRC’s interests. (https://www.nytimes.com/2014/12/17/business/energy-environment/-us-imposes-steep-tariffs-on-chinese-solar-panels.html) 50 For example, China’s TC90 National Solar Photovoltaic Energy System Standardization Technical Committee: That Committee

was established in 1987, with its secretariat affiliated to the 18th Research Institute of China Electronics Technology Group Corporation, a Chinese military company. (太阳能光伏国家标准 [National Standard for Solar Photovoltaics], Shenzhen Institute of Standards and Technology, April 29, 2019.) https://tbt.sist.org.cn/zdcp_75/dc/tyndcjgfzj/zgsc_1042/200903/t20090304_163443.html).

51 For example, China’s National Solar Photovoltaic Energy System Standardization Technical Committee and China Photovoltaic

Industry Association actively engage in international standard-setting activities. (See: “光伏产业链供应链合作对接会暨 2022 年度太 阳能光伏国际标准化工作会议召开 [The Photovoltaic Industry Chain Supply Chain Cooperation Matchmaking Meeting and the 2022 Solar Photovoltaic International Standardization Work Conference were held],” Sohu, October 14, 2022.) From the corporate angle, in 2017, Chinese solar giant JinkoSolar convened a solar cell working group within the IEC, an international organization, to develop

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a standardized testing method for bifacial solar modules. (Ian Clover, "JinkoSolar and TÜV Rheinland to create testing standards for bifacial modules," PV Magazine, July 11, 2017. https://www.pv-magazine.com/2017/07/11/jinkosolar-and-tuv-rheinland-to-createtesting-standards-for-bifacial-modules/) 52 “华为竟然是光伏逆变器制造企业出货量全球第一？[Huawei is actually the world's number one photovoltaic inverter manufacturer

in terms of shipments?],” Solar OfWeek, June 11, 2021.

53 “About Sungrow,” Sungrow, Accessed January 12, 2024. https://us.sungrowpower.com/AboutSungrow/1/introduction; “安徽代

表团建议：以合肥为中心，设立国家军民融合创新示范区 [Anhui delegation suggested: Set up a national military-civilian integration innovation demonstration zone with Hefei as the center],” Anhui News, March 5, 2018.

54 “阳能光伏国际标准化工作会议顺利召开 [Solar photovoltaic international standardization work conference was successfully held],”

Photovoltaic Industry Association, May 20, 2021. http://www.ntsibpv.com/chuangxinjidibiaozhundongtai/118.html 55 Ana Swanson, “Chinese Solar Companies Tied to Use of Forced Labor,” The New York Times, January 8, 2021.

https://www.nytimes.com/2021/01/08/business/economy/china-solar-companies-forced-labor-xinjiang.html ; “Traced to Forced Labor: Solar Supply Chains Dependent on Polysilicon from Xinjiang,” US Department of Labor. https://www.dol.gov/sites/dolgov/files/ILAB/images/storyboards/solar/Solar.pdf 56 Michael Stumo, “Will the Inflation Reduction Act Benefit American Or Chinese Solar Companies?” August 15, 2023.

https://prosperousamerica.org/will-the-inflation-reduction-act-benefit-american-or-chinese-solar-companies/ 57 “PV Supplier Market Intelligence Program Q2 2023,” Clean Energy Associations 58 “How will China’s expansion affect global solar module supply chains?” Wood Mackenzie, October 2023.

59 “Spring 2023 Solar Industry Update,” National Renewable Energy laboratory, April 27, 2023.

https://www.nrel.gov/docs/fy23osti/86215.pdf 60 “PV Supplier Market Intelligence Program Q2 2023,” Clean Energy Associations, 2023.

61 “垂直一体化：中国光伏产业的必然趋势 [Vertical integration: the inevitable trend of China’s photovoltaic industry],” Brocade

Research Institute, October 12, 2022. https://baijiahao.baidu.com/s?id=1746438337285707694&wfr=spider&for=pc 62 For example, Longi Solar has received PRC government subsidies including “special funds for industrial and information

development to build 5GW monocrystalline silicon ingots,” “functional development of single crystal silicon growth digital platform for big data integration and analysis,” “fixed asset investment subsidies,” and “national robotics project” funding. PRC solar companies also benefit from and support formal PRC industrial policy programs. For example, Sungrow operates a National Industrial Design Center and has been recognized as a “single champion” by the PRC’s Ministry of Industry and Information Technology.

63 “PV Supplier Market Intelligence Program Q2 2023,” Clean Energy Associations, 2023.

64 Figures are sourced from company annual statements published in 2023.

65 The profit figure used is net profit after deducting non-recurring gains and losses.

66 “How will China’s expansion affect global solar module supply chains?” Wood Mackenzie, October 2023. The PRC has a history

of using localization, or beachheads, not only to circumvent trade restrictions but also in some cases to benefit from other geographies’ preferential trade status. Explain beachheads and localization. (See: “When the Iron Is Hot: The Chinese Communist Party’s Subversion of US Recovery Investment,” Horizon Advisory, June 2020; “Viral Moment: China’s Post-COVID Planning,” Horizon Advisory, March 2020.)

67 “How will China’s expansion affect global solar module supply chains?” Wood Mackenzie, October 2023.

68 Michael Stumo, “Will the Inflation Reduction Act Benefit American or Chinese Solar Companies?” August 15, 2023.

https://prosperousamerica.org/will-the-inflation-reduction-act-benefit-american-or-chinese-solar-companies/ 69 “Department of Commerce Issues Final Determination of Circumvention Inquiries of Solar Cells and Modules from China,”

Department of Commerce, August 18, 2023.

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70 “PV Supplier Market Intelligence Program Q2 2023,” Clean Energy Associations, 2023.

71 See, for example, Keith Bradsher and Hiroko Tabuchi, “China Is Said to Halt Trade in Rare-Earth Minerals With Japan,” The

New York Times, September 24, 2010.

72 “Solar Industry Research Data,” SEIA. 73 Max Hall, "China dominated global solar jobs market in 2021," PV Magazine, September 27, 2022. https://www.pv-

magazine.com/2022/09/27/china-dominated-global-solar-job-market-in-2021/.

74 国务院办公厅关于印发能源发展战略行动计划（2014-2020 年) [The General Office of the State Council issued the Energy

Development Strategic Action Plan (2014-2020)], State Council, 2014.

75 “中国新能源产业发展战略的定位 新能源产业的政策框架与政府角色 [The positioning of China’s new energy industry development

strategy, the policy framework and government’s role in the new energy industry],” China Academy of Engineering Industry Planning Network, September 21, 2023. https://m.sohu.com/a/722255454_477039/.

76 “赵颖君 | 我国光伏产业如何继续保持领先优势 [Zhao Yingjun | How does my country’s photovoltaic industry continue to maintain

its leading edge?],” China International Engineering Consulting Corporation, August 2023.

77 Shenzhen Institute of Standards and Technology, April 29, 2019; TC90 全国太阳光伏能源系统标准化技术委员会 [TC90 National

Solar Photovoltaic Energy System Standardization Technical Committee], Standardization Administration of China.

78 "华为在自家屋顶验证智能光伏方案：+智能，见未来 [Huawei verifies smart photovoltaic solution on its own roof: +Smart, see the

future]," Huawei, September 2018; “华为竟然是光伏逆变器制造企业出货量全球第一？[Huawei is actually the world's number one photovoltaic inverter manufacturer in terms of shipments?],” Solar OfWeek, June 11, 2021.

79 Sheldon Kimber, “Why Solar Cost Declines Were a Lie... Sort Of,” Intersect Power, November 28, 2023.

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