China KO's EU in Solar Trade War

When the EU threatened solar tariffs, China went after their most precious cultural and culinary export: wine!

The EU-China solar trade war is over on amiable terms; an agreement was reached. But the truth of the matter is that China has dominated the EU, and once again demonstrated its power on the world stage.

China's large subsidies gave domestic companies a huge
advantage on the world market, prompting investigations
into price dumping and tariffs from the US

The Chinese initiated a strong boost to their solar market in 2008 through subsidies. This prompted a huge domestic boom and the jump to world leader in solar panel production. It wasn't until late 2011 when US solar panel manufacturers began going bankrupt in large numbers. That prompted the US Department of Commerce to launch an investigation into Chinese price dumping. Despite a myriad of threats from the Chinese to impose their own reactionary protectionist policies and later follow through, the US tariffs were implemented in late 2012. These tariffs ended up being weaker than initially intended to the chagrin of many US solar panel makers.

De Gucht and China's commerce minister, Gao Hu Cheng, agree to end the
wine/solar trade dispute, clearly in conflict with De Gucht's 50% stake in a
Tuscan vineyard.[wine-searcher]

The EU followed suit around the time the US's tariffs were imposed and launched their own investigation, although with wildly different results. China quickly made things personal with a blunt instrument aimed squarely at the EU's trade commissioner Karel De Gucht's own fortune: a price-dumping investigation into European wine imports to China. Besides being a personal attack on De Gucht's 50% stake in a Tuscany vineyard, the European wine industry exports to China value nearly $1 billion each year. At a time when the debt crisis is still having a profound effect on economies, this, as well as the threat of further economic retaliation, was heavy pressure from the Chinese.

On Monday, July 29th, the EU showed its weakness on the world stage and cowed to China's demands by "agreeing to" a solar price nearly equal to the dumping price. This keeps one of China's two major solar markets buying solar panels at far below production costs. The inquiry into wine export price dumping was quickly halted.

China recently also flexed its muscles in Japan's direction over the disputed Senkaku Islands. They showed how ugly they could get, going as far as inciting their own people to riot in the streets in protest, conducting military training exercises clearly imitating taking the islands by military force, and just today releasing a video game simulating an all out conflict over the islands on China's Armed Forces Day. China's continued efforts to antagonize Japan have thus far thankfully not led to war, but this was one of the first times such a public dispute has happened between the two countries since China's military might has rivaled, or even surpassed, that of Japan.

China's recent wine-centered global demonstration of world power with its tariffs and economic bullying is even more potent, showing the East's rise and the West's current lethargic stasis. China would never have dared to challenge Europe in this way 20, or even 10, years ago; 2008 provided them not only the Olympics, but a chance to strike. Interestingly, and not coincidentally, China's price dumping is a direct result of the policies that allowed them to artfully ride out (for the time being) the economic catastrophe that dragged the EU and the rest of the Western world into turmoil and recession. China's stimulus gave solar producers a huge edge on the world stage, an edge that the US and EU governments chose not to hone.


Bonus Footage: China's Newest Videogame!