US wants to prevent Chinese solar power from being produced in the US

US lawmakers propose bill aimed at preventing Chinese solar panel maker from building factories in the US.

Reuters quoted a source as saying that the goal of the bipartisan US legislative group when drafting the bill was to prevent Chinese solar panel manufacturers from receiving subsidies if their factories were built in the US.

In 2022, the Biden administration is offering a clean energy package that will provide tax breaks and subsidies for companies building plants in the U.S. But some U.S. solar equipment manufacturers say they find it difficult to compete with some of China’s largest solar companies operating here.

A Mission Solar worker in San Antonio, Texas, inspects the protective coating of a solar panel. Photo: Texas Tribune

Lawmakers worry that China’s large presence in the global solar market could put pressure on America’s position. “We can’t let American taxpayer dollars go to Chinese companies,” said Senator Sherrod Brown of Ohio. The bill is co-sponsored by Democratic Senator Jon Ossoff of Georgia and Republican Senators Rick Scott of Florida and Bill Cassidy of Louisiana.

China now dominates the supply chain for solar, wind and battery technology. Companies in the country produce more than 80% of key components, according to Bloomberg NEF 2023 data. They also supply more than 95% of the wafers (crystalline silicon wafers) and ingots (metal ingots) needed to assemble solar panels.

The US wants countries not to provide semiconductor technology to China.

In addition to solar, the US is expected to announce a new document this month, expanding the previous Foreign Direct Product rule. It is expected that about "half a dozen" Chinese semiconductor factories will be banned from accepting exports from 30 different countries and territories if they use US technology, directly or indirectly. However, it is not clear which Chinese factories will be affected.

However, the Netherlands and Japan - home to leading semiconductor suppliers ASML and Tokyo Electron - were not included in the new rules. Shares in both rose sharply on the news.

"The US Department of Commerce continuously assesses issues that may threaten the development of semiconductors, and regularly updates export controls as needed to protect US national security and the technology ecosystem," a US Department of Commerce spokesperson said.

On the Chinese side, Foreign Ministry spokesman Lin Jian said that the US efforts are "forcing other countries to suppress China's semiconductor industry", as well as undermining global trade and causing harm to all parties. He hoped that relevant countries would oppose the new regulations if they were issued to protect their long-term interests.

"The containment and suppression that the United States is carrying out cannot stop development, but only strengthen China's determination and ability to develop self-reliance in science and technology," the spokesperson said.

The US Foreign Direct Product Rule states that if a product is made with US software or technology, the US government has the right to block the sale of that product, including products manufactured abroad. The rule has been in place since 2019 and applies primarily to Huawei, before expanding to several other Chinese semiconductor companies in 2022.

According to experts, the US is trying to hinder China's goal of semiconductor self-sufficiency, including recent breakthroughs in self-production of chips, supercomputers and AI.