Industrial and green policy in China: a case study of global competition in the solar PV industry

Abstract

China is an example of a country that uses industrial policy functionally, its fast development has been deeply observed by Western countries, and served as an example for other developing countries. Through different important projects and a long-term organisation provided by the Five-year plans, China created the right situation to become the second-largest economy in the world. Industrial policy is generally defined as an intervention aimed to the alteration of sectors, technologies or tasks in order to reach economic growth. However, there are different views over its use and definition, which will be briefly analysed in this thesis to better understand why and how China uses it. Industrial policy is still a much discussed topic, even if after the 2008 financial crisis, the discussion changed from “should we use it or not?”, to “how should we use it?”. This phenomenon is also visible when we are talking about green industrial policies. Green industrial policy is an industrial policy that also gives importance to the impact of policies on the environment and tries to promote climate protection. As one of the largest polluters in the world, China has adopted several strategies to reach its environmental goals, one of which is to reach carbon neutrality by 2060. Through some of these strategies, China started to promote solar energy as a new renewable resource, making China the largest producer of solar components and photovoltaics in a few years, exploiting different advantages both coming from the market and not, such as its huge solar capacity. China’s sovereignty in the industry caused different reactions from other countries. China was accused from both the European Union and the United States to be dumping prices and, by doing so, gaining an advantage that caused an unfair competition on the market. China’s solar PV prices were reported to damage European and American solar panels industry, and so between 2011 and 2012 different disputes were raised against China, and finally both the European Union and the United States set anti-dumping duties that could contain import flows from China. The question that will be answered in this thesis is: Should countries give priority to competition problems, or turn a blind eye and prioritise the purpose of environmental goals? On the first chapter, a general definition of industrial policy, green industrial policy and competition is given to better understand these concepts and their connection in the Chinese context, explained in details on chapter two. In fact, on chapter two we will investigate how China evolved from an isolated country to a global power through interventions on the manufacturing industry. Finally, chapter three gives an overview about Chinese policies that led the country to take primacy on the solar photovoltaic supply and value chain. This situation raised different competition concerns, especially among countries that were guiding the solar market such as Germany, Italy and the United States. It is interesting to see how the European Union and the United States reacted to this situation of competition and solved it through different disputes and instruments.