China Admits Companies Hoard Solar. They Got Biden To Remove Tariffs Because Of It

The Chinese government admitted that its solar manufacturers — the biggest in the world — were hoarding solar panels and the solar cells that go into making them.

China’s Industrial Ministry warned on Wednesday that domestic solar monopolies are hoarding products, Reuters reported. They did not name names.

Due to supply and demand mismatches, severe price fluctuations, and hoarding in the supply chain of the solar industry, there is an “urgent need to deepen industry management,” the ministry said. “Local market supervision departments should strengthen supervision and management… (and) severely crack down on illegal activities in the photovoltaic industry,” the article said, citing the Ministry’s statement. “Hoarding is strictly prohibited,” the Ministry said.

China is the world’s largest solar manufacturer. Eight of the world’s ten largest solar companies are Chinese. Only one is South Korean — Hanwha Q Cells — and one is American, First SolarFSLR
of Ohio.

China’s word-to-the-wise comes months after major solar importers and power companies like Florida-based NextEra warned about the big solar multinationals in Southeast Asia holding off on shipments due to a trade investigation at the Commerce Department.

This spring, the Commerce Department was beginning an investigation into Chinese multinational solar makers based in Vietnam, Malaysia, Cambodia and Thailand selling solar cells and solar panels into the U.S. below costs.

China’s solar companies have already been tariffed after multi anti-dumping investigations by U.S. based solar companies had been won. China quickly turned to build factories in Southeast Asia to avoid those duties. California-based Auxin Solar brought the case to the Commerce Department late last year, complaining that China’s solar companies were circumventing those duties and new ones needed to be applied to Chinese manufacturers in those four countries.

But as the investigation got underway, Chinese companies hoarded supply, and refused shipment, citing uncertainty in the trade case. Solar prices rose as a result of these supply chain bottlenecks and the White House feared that its renewable energy goals would not be met. They were told as such by many solar importers.

The solution for the Biden administration was to kill that trade case and put a two-year moratorium on tariffs against Southeast Asian solar products.

“Nextera and other solar installers wanted to install solar over the summer and said that the companies in Southeast Asia owned by Chinese multinationals were refusing to ship to them,” says Jeff Ferry, chief economist with the Coalition for a Prosperous America, a Washington DC organization advocating for U.S. manufacturing.

“It was clear to us that Chinese companies had grouped together and were holding a gun to the Biden administration, saying unless you stop this circumvention trade case, we will ‘starve’ your solar installer industry,” Ferry says.

The White House agreed to stop the investigation, a huge benefit to China solar companies.

“Such a move by the White House in the middle of an anti-dumping case has never happened before. China uses its dominance to make its dominance even greater and intimidates its customers to prevent the growth of potential new suppliers outside China,” Ferry says. “We are totally dependent on them for solar. This is a huge problem for the U.S.”

China has been known to hoard numerous items of importance to its economy. China is so large, and such a force in global supply chains, that hoarding by Chinese companies affects global prices. This goes for everything from soybeans to iron ore, solar panels to textiles.

Some argue that China does this on purpose. But it is unclear if this comes from orders on-high in Beijing, or companies acting in a cartel-like manner.

Moreover, provincial leaders in China often go beyond what is the general consensus of Communist Party bosses in Beijing. The need for full employment often leads to oversupply and hoarding of materials to dump onto world markets later on.

China’s official warning makes Beijing look like it is cracking down on anti-market practices.

The industrial ministry cautioned against hoarding solar materials today but also encouraged the solar industry to develop reserves of polysilicon and other solar supply chain materials to promote stability of the industrial supply chain.

This is an odd call considering China already dominates both of those segments of the solar business — polysilicon and the ingots that go into making solar cells.

China’s most significant risk on the polysilicon side is the Uyghur Forced Labor Prevention Act, a new law signed this summer that bans imports of solar panels made from polysilicon sourced from a banned entity called Hoshine Silicon Industries, located in Xinjiang province. Customs and Border Protection have stopped a few shipments at ports since 2021. The law went into effect this year.

Since the trade case was canceled on June 9th on worries about supply chain stoppages by Chinese solar players in Southeast Asia, Jinko Solar’s shares rose 64.88%, while shares of First Solar over the period are down 12.36%.