Growing tensions led the two economic powers to the brink of a trade war which negatively impacted the Sino-EU trade relationship, and brewed scepticism around Chinese cross-border economic activities. The friction intensified quickly and resulted in one of the most intense trade disputes in the history of Sino-European bilateral trade.
Some observers also point out that the dispute adversely impacted the development of Europe’s photovoltaic market, hindering the run towards a low-carbon future for the continent.
The start of China’s sustainable outlook on development
But, where did it all start? The dispute traces its roots back to 2007, when the Chinese government announced its Medium-and Long-Term Plan for Renewable Energy Development, with the intention of making the solar panel sector a pillar industry (SEI).
To this end, several internal electrification projects were launched. These, coupled with export-stimulating policies, such as tax rebating and the dual exchange rate system, caused many Chinese solar panel manufacturers to turn to the European market. The latter was experiencing a huge surge in demand in the solar energy sector at the time.
As a result of a quickly developing renewable energy industry, the Chinese government started challenging EU pioneering roles in the production of photovoltaic modules and components.
To give our readers a better idea of the huge flow of solar panels exported from China into the EU, we can say that China was able to capture more than 80% of the European market in less than six years. This allegedly led forty European solar product firms to insolvency between 2009 and 2012. The below figure shows that Chinese exports of photovoltaic devices dropped tremendously after this period.