mead cohen berger shevtsova garfinkle michta grygiel blankenhorn
China & EU Settle Squabble Over Wines and Solar Panels


A trade spat between China and the EU over solar panels and wine reached a turning point today as both sides agreed to back down and enter negotiations. The EU, which had accused China of dumping solar panels into the European market at exceptionally cheap prices, levied a 47 percent duty. China retaliated by launching a similar inquiry into European wines imported into China. China, it turns out, has become the world’s biggest importer of Bordeaux wines.

A trade war was averted with today’s agreement, the FT reports: “China will freeze investigations into European wine and polysilicon exports as part of a landmark settlement with Brussels to defuse a dispute over solar panels.” Reuters has more: “EU and Chinese diplomats expect the wine dispute, as well as another conflict over EU exports of polysilicon—a raw material for solar panels—to be dropped as a goodwill gesture.”

Two points: first, though it might appear at first glance that the Chinese “won” this round, it’s overall a battle over greatly diminishing returns. Green subsidies in the EU and elsewhere have caused solar manufacturers to greatly overproduce, creating a worldwide glut in panels that has yet to work itself through the system. Though some industry analysts are predicting the glut will end by 2015, we remain skeptical. Though there have been some bright spots in very narrow, specialized markets, overall solar can’t compete with more traditional brown sources of energy, which should be in abundance for the foreseeable future.

Nevertheless, it’s still a fact that China bared its teeth and Europe backed down. China’s threats over European wine imports were credible, and the EU did not feel up for a trade fight in this dismal economic environment. China is clearly feeling its oats. Though the EU trade commissioner denied that he had “given in” to the Chinese, EU solar manufacturers still feel jilted. “This agreement is not a solution but a capitulation,” Milan Nitzschke, the president of the umbrella group of EU solar companies told the FT. It’s “not ideal,” EU officials admitted.

[Wine bottles image courtesy of Shutterstock]

Features Icon
show comments
  • Thirdsyphon

    Honestly, it sounds to me like nobody “won” this round. The Chinese agreed to let the EU keep subsidizing its winemakers, in exchange for which the EU agreed to allow China to continue pouring money down the rathole of its immensely-subsidized solar panel industry.
    China’s industrial policy has been to subsidize their solar industry to such an extent that American competitors have been largely driven out of business. If it turns out that solar *itself* is not competitive, and cannot be made so, then China is stuck with a very expensive white elephant in the form of its solar industry. . . and one that it cannot afford to stop pouring money into, given China’s need for economic growth.
    The real lesson to be drawn here isn’t about Green vs. Brown. It’s about the limitations and frequent follies that often plague subsidized industries.

    • rheddles

      The vintners and America won. Everybody else lost.

  • Corlyss

    The way to hurt the Chinese is to stop the mad, self-destructive death embrace of wasteful, over-priced, prosperity-killing renewables. They are the mythical Northwest Passage of the 21st century, a wholly self-inflicted wound on the struggling Western economies.

    • Thirdsyphon

      Ironically, the Northwest Passage now exists.

      • Corlyss

        Yes, but not where everyone said it was or ought to have been. That route is still a myth.

© The American Interest LLC 2005-2016 About Us Masthead Submissions Advertise Customer Service