Saturday, December 9, 2023

This is how China beat Europe

Norwegian Crystals declared bankruptcy and Norsun ceased production. Both companies are the first victims of China’s aggressive strategy to dominate the solar panel market, which could cause a wave of bankruptcies in Europe. China has reduced the price of its solar panels by 30% thanks to the heavy subsidies Beijing has allocated to its industry, and is also trying to strangle the production of its competitors by reducing sales of two critical materials for manufacturing panels: gallium and germanium. . China produces 80% of the world’s gallium and 60% of its germanium.

These two measures brought some European manufacturers to the brink of bankruptcy and jeopardized Brussels’ goal of increasing the production of green technologies in Europe. Chinese panels already account for three-quarters of Europe’s solar energy imports, and it is estimated that China has so many photovoltaic cells in storage that it could cover twice the annual demand of all of Europe. This has raised fears that the EU is developing a solar dependency on China similar to its one on Russian gas until Moscow’s invasion of Ukraine.

The case of solar panels is a good example of both China’s strategy to dominate strategic markets and the EU’s passivity and incompetence when it comes to developing its industry. 25 years ago Europe was a leading producer of solar panels. Soon after, Chinese producers started flooding the market with their cheapest panels thanks to massive state subsidies. In Europe the alarms were ringing and in 2012 tariffs were imposed on Asian products. But only 6 years ago, the politicians of the community decided to withdraw tariffs on panels in China to promote renewable energy. Now the market belongs to Chinese companies and European solar energy manufacturers – through SolarPower Europe – have no choice but to desperately ask for an urgent plan to save the community of 100 million to avoid sector bankruptcy.

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These legislative changes show the lack of a clear strategy on the part of the European authorities to deal with the unfair competition that Chinese companies are doing in the market and that puts many sectors in ropes. Now the battle is coming to the air industry.

The problems faced by manufacturers such as Siemens Gamesa and the excessive bureaucratization of European countries in granting permits for wind projects allowed the emergence of Asian producers, who began to win orders through to offer cheaper turbines, less strict standards than European ones and very aggressive. financial situation. Brussels has reacted quickly to avoid the loss of this industry – as happened in solar – and has already announced a package of support measures for the sector. The association of Wind Europe owners praised the plan, but urged it to be implemented as soon as possible to ensure the survival of European production.

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Car manufacturers also warned of the large arrival in the community market of vehicles produced by the Asian giant at prices that would be difficult for the European industry to match. An attraction achieved by Chinese groups thanks to practices considered illegal in the West, such as generous state aid from the communist regime, very low taxes and low labor costs. Beijing gives 60% more assistance to electric vehicles than in Europe, which explains why models are sold in China for 4,000 euros while the average in Europe is around 40,000 euros. China’s generous state subsidies for its electric vehicles have totaled €55 billion over the past 5 years. Only the Asian manufacturer BYD received 220 million in 2022.

Although the President of the Commission, Ursula von der Leyen, criticized this unfair competition and recently launched an investigation into this matter, European manufacturers are skeptical and expect a violent war in the price of the electric car market, especially all in the lower ranges. European giant Volkswagen plans to produce its smallest electric model in Spain, the ID2, which it will sell for around 25,000 euros, when similar cars in China cost less than 20,000 euros.

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The Asian giant’s cars have already landed in European markets, and even the ZS model from Chinese MG became the best-selling car in Spain in August. It also got a lot of attention that at the recent Munich Motor Show, Asian manufacturers occupied more than half of the exhibition space. And China is about to overtake Japan as the world’s largest auto exporter.

Europe must promote active policies to support the car and promote a smooth and realistic transition towards electric cars without ideological fundamentalism – with realistic and non-utopian goals – and taking into account the opinions of manufacturers. Only in this way will a balance be achieved between the defense of Europe’s important automotive sector – which represents 7% of GDP – and the protection of free competition. The artificial increase in the cost of products coming from abroad, in this case from China, can harm the consumer and also harm the competitive capacity of European companies.

Nation World News Desk
Nation World News Desk
Nation World News is the fastest emerging news website covering all the latest news, world’s top stories, science news entertainment sports cricket’s latest discoveries, new technology gadgets, politics news, and more.
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