Global green energy push suffers as result of US crackdown on Xinjiang solar panels
flation, and worldwide consumers will be forced to pay the price,” said Zhang Jie, who runs a textile plant in Xinjiang and a clothing export company in Shanghai.
However, even if foreign companies could afford to resort to cotton from the US or India – the other two major cotton producers, they would be severely battered by the US’ crackdown on Xinjiang solar panels, especially at a time when major economies are striving to realize carbon neutrality and put climate change on the agenda.
Hindering green push
The world needs Xinjiang companies and their components in their green energy push, which is expected to lead to a boom in demand for solar panels.
According to a recent report by the International Energy Agency ( IEA), the global manufacturing capacity for solar panels has increasingly moved out of Europe, Japan and the US over the last decade and into China, which has taken the lead in investment and innovation.
China’s share in all the key manufacturing stages for solar panels exceeds 80 percent today, said the IEA report, and for key elements, including polysilicon and wafers, this is set to rise to more than 95 percent in the coming years.
Xinjiang is rich in quartz ore, the raw material for industrial silicon, which is a key ingredient in solar panels. It also offers companies lower electricity costs thanks to its abundant energy resources, making the region a major production hub for polysilicon in China. Xinjiang accounts for over half of the country’s total polysilicon production capacity, the Xinhua News Agency reported.
The latest data from German research firm Bernreuter Research shows that seven of the world’s top 10 largest polysilicon producers are based in China, with the others based in the US, Germany and South Korea.
In a sinister scheme to clamp down on the booming industry in Xinjiang and thereby squeeze China out of the global supply chain, the US put five large Chinese polysilicon producers on its Entity List in June 2021, citing the baseless claim of “forced labor” in the region.
Part of the crackdown on Xinjiang is associated with the West’s efforts to build up trade barriers using so- called standards such as “human rights.”
But industry insiders said that even if other countries have the capacity to produce polysilicon, higher costs and other problems would appear in the global solar supply chains under the US ban. For example, the old facilities and polysilicon manufacturing equipment at foreign companies such as REC Group, OCI Solar Power and Hemlock would create increasing uncertainties for the global solar industry.
Lü Jintao, a polysilicon expert with the China Nonferrous Metals Industry Association, said upstream polysilicon companies have been making changes by adding production capacity in other areas. This move, together with production of raw materials, will continue to ensure China is the No. 1 supplier of solar products to the EU as well as the US.
Costs for solar photovoltaic manufacturing in China are 35 percent lower than in Europe, 20 percent lower than in the US, and 10 percent lower than in India, a report by the International Energy Agency showed on July 22.
Scatec ASA, a leading Norwegian company that specializes in renewable energy systems, told the Global Times that it is still assessing how the UFLPA will affect it. By stressing that this is an “ongoing” process, it underscores the difficulty and complexity of gauging how the US law could affect their operations, as well as global industrial and supply chains.
Hurting US exports
In addition to creating chaos around the world, the US bill also hurts US own exports to China.
According to Xinjiang import and export data obtained by the Global Times from the General Administration of Customs, which analyzed 29 categories of electromechanical product imports from the US that form the bulk of Xinjiang’s imports, the imports of cotton pickers dropped by 40.2 percent year- on- year in the first six months of the year, even as Xinjiang’s overall imports were growing by 6.7 percent.
An industry insider said Xinjiang used to be an important sub- country market for US agricultural and healthcare companies but the “evil bill” was beginning to eat into the fortunes of US companies.
“We would like to buy US machines to pick our cotton; they have good product quality and good servicing teams. It is a sad thing that normal business is now hijacked by politically charged moves,” the insider said.
Wang Jiang, an expert at the Institute of China’s Borderland Studies at Zhejiang Normal University, said that although the “evil bill” bans the imports of Xinjiang products, its impact is also expanding to affect Xinjiang’s imports of Western goods as companies cave in to its chilling effect out of the need for self- protection.
“Besides agricultural machinery such as combine harvesters, equipment used in oil drilling and healthcare products are also seeing falling imports,” Wang said, noting the bill has caused business for some Western companies to contract.
Some hospitals in Xinjiang have cut their imports of medical equipment from the US and Europe, though it remains to be seen whether they are individual cases or evidence of a wider decline in Western imports, Wang said.
GAC data showed that the import value of magnetic resonance imaging and color ultrasound doppler equipment declined by 52.5 percent and 65.2 percent in the first half of 2022.
It is hypocrisy that the bill is taking away Xinjiang people’s access to medical equipment while claiming to be safeguarding human rights, Wang said.