Continued from Part One.
In another twist, the Chinese are looking to bring their own case against the US in what appears on the outset as a somewhat self-defeating act.
Beijing is considering sanctioning a trade case against US producers of polysilicon, the raw material for stage 1 of the process (mentioned in Part One). The US exports about $873 million of polysilicon to China each year, roughly the same as the US imports in finished panels from China. The NYT article tells us polysilicon requires enormous amounts of energy. The process requires super-heating large volumes of material in electric-arc furnaces, including the melting of quartzite rock at more than 3,600 degrees Fahrenheit. The United States is one of the world’s largest producers of polysilicon, in states like Tennessee and Washington, because it has access to less expensive hydroelectric power.
China’s own polysilicon industry is controversial because it relies heavily on electricity generated by coal-fired power plants, which are both high-cost and pollution-intensive, and because weak environmental controls at Chinese polysilicon factories have resulted in toxic spills that have fouled streams and rivers. If China places tariffs on US suppliers, they will simply end up paying more for their raw material and encouraging domestic investment in exactly the kind of industry Beijing is seeking to dissuade in the new Five-Year Plan high-energy-consuming basic materials.
“This is not surprising at all — China is well-known for responding to trade cases by filing retaliatory trade cases,” said Tim Brightbill, counsel to the SolarWorld and the U.S. petitioners in the solar case, in an interview with MetalMiner. “This is just another example of China not playing by the established rules of international trade.”
Brightbill went on to say, “One interesting aspect of a polysilicon case is that while China used to be reliant on U.S. polysilicon imports, it is much less so today — because it has created its own heavily subsidized polysilicon industry in China. The U.S. subsidy petition filed against China alleges that all of China’s top 10 polysilicon producers are state-owned or [state]controlled.
While on the subject of environmental problems, the question may have occurred to you, why don’t the Chinese go the whole hog, much like Japan did eventually with autos, and build all four stages in the US accessing domestic US polysilicon in the process? One reason appears to be that the US cares about its environment and permitting for firms engaged in manufacturing that uses a lot of chemicals is said to be too onerous better to produce in China where no one cares.