The European Union is concerned with the alleged “dumping” of solar panels by Chinese manufacturers. Norwegian economist Johannes Mauritzen writes – correctly in my opinion – that Europeans should thank the Chinese for supplying them with inexpensive solar panels, rather than levy anti-dumping tariffs.
If Chinese policy makers are intent on subsidising solar panels for the European market, the correct policy response should be to let them.
If cheap panels from China mean that more solar power replaces coal or gas power then an externality is corrected, and that correction comes free for Europeans. More so, a movement of panel production from Europe to China will have a minimal effect on jobs – panel production is heavily mechanised and needs few workers. On the other hand, installing and repairing solar panels is a job that is impossible to outsource. Europe can have its cake and eat it too, at China’s expense.
Johannes Mauritzen, “Europe should let China subsidise its energy production“, letter to the editor, Financial Times, 11 September 2012.
Mr Mauritzen is studying market power in the Nordic electricity market at the Research Institute of Industrial Economics in Stockholm, Sweden.