In recent years, the increasing trade protectionism in the United States has prevented China from expanding its exports through Southeast Asia. As a result, solar energy companies in China are experiencing disruptions in their production activities within the Southeast Asian region.
According to a report from the Chinese trade journal Arfcg.com on Tuesday, Longi Green Energy Technology Co., based in Xi’an, Shanxi Province, has started to gradually reduce production activities at its factory in Malaysia this week. Additionally, the report mentioned that the company had ceased production on all five production lines at its factory in Vietnam the previous week.
Furthermore, Sina Finance reported on Wednesday, citing unnamed sources, that Trina Solar Co., based in Changzhou, Jiangsu Province, had also halted production at a factory in Thailand.
A spokesperson from Longi reportedly stated that the company has made “adjustments” to its production plans in response to the significant price drops and changes in trade policies since the beginning of the year.
Despite efforts by Chinese solar energy companies to adapt to the situation, their profits have dwindled due to oversupply resulting from the commissioning of new factories last year. The introduction of new products has surpassed market demand, leading to challenges. U.S. and European officials have accused China of hindering their efforts to develop their own supply chains.
In response to these developments, the Biden administration recently implemented a series of regulations to strengthen tariffs on solar equipment. The two-year exemptions on certain solar products imported from Cambodia, Malaysia, Thailand, and Vietnam will come to an end on Thursday. The U.S. also plans to swiftly terminate exemptions for bifacial solar modules.
These four countries have been the subject of trade complaints, with allegations that Chinese manufacturers conduct business in these countries to circumvent import tariffs on solar components from the Obama era. Data from BloombergNEF shows that these four countries collectively accounted for over 70% of the U.S. component imports last year.
A group of U.S. solar manufacturers has submitted applications to Washington, seeking additional tariffs of up to 271% on equipment from these four countries.
According to a report from BloombergNEF last month, this proposal has already led manufacturers in these four countries to halt the procurement of raw materials, indicating the severe impact of the trade tensions in the solar energy sector.