Author accepted manuscript (2015)
Citation:
Caprotti, F. (2015) Golden Sun, green economy: market security and the US/EU-China ‘solar trade war’. Asian Geographer 32(2): 99-115.
Golden Sun, Green Economy: Market Security and the US/EU-China ‘Solar Trade War’
Abstract
China’s solar manufacturing and R&D industry has developed rapidly since 2000: by 2010, 40% of the world’s solar panels were manufactured in China. This has occurred as a result of strategic government economic planning, which has included concerns about energy security, energy diversity, and about the stimulation of a renewables-based green economy. The growth of China’s solar industry has been marked since 2011 by what has come to be termed a ‘Solar Trade War’ between the EU, the US and China. The paper analyses the heterogeneous framing of China’s solar energy industry by corporate, non-governmental and government actors in the US and EU. In so doing, the paper aims to critically investigate the production of specific market knowledge(s) that are not only instrumental and rational, but based on often-contradictory discursive constructions of an apparently merely technological and economic phenomenon such as the production of solar modules.
Golden Sun, Green Economy: Market Security and the US/EU-China ‘Solar Trade War’
Introduction
China’s solar industry has developed rapidly since 2006, as a result of government strategies aimed at diversifying the country’s energy generation landscape and increasing China’s energy security whilst promoting the development of a national green economy by focusing on high-tech, value-added sectors (Mathews and Tan 2014). In turn, the Chinese government’s support for the development of national renewable energy industries can be seen as part and parcel of a geopolitical and geo-economic strategic attempt to gain dominance in industrial markets that are central to contemporary and future concerns over energy security.[1]The paper focuses on how the rapid development of China’s solar industry was framed by networks of discursive actors in the European Union (EU) and in the United States (US), the two main markets affected by competition from Chinese solar technology imports. The following centres on the case of the ‘Solar Trade War’ which broke out between the US, the EU, and China in 2011 and which is on-going at the time of writing. The trade war is a useful moment through which the performance of the Chinese solar industry by a network of actors in the US and EU can be analysed. In so doing, the paper investigates the cultural economy around the ways in which economic sectors are framedby actors with a stake in specific representations of a particular sector. Specifically, the following focuses on the deployment of discourses of market security to frame the Chinese solar industry in ways that highlight tensions around the relationship between firms and the state.
The rapid development of China’s economy in the post-Mao era of economic and industrial liberalization has necessitated the installation of increased power generation capacity. In the Chinese context, capacity development is characterised by a multi-scalar set of strategic initiatives. These are often described as strategic responses to a series of economic, environmental and other concerns, including: the need to continue powering China’s high GDP growth level; enabling the growth of a rapidly expanding consumer economy, linked in no small part to an emergent consumerist middle class, while maintaining the legitimacy of the Chinese Communist Party; a need for increased energy source diversification; and a strategic focus on energy security. These are important issues,most of which lie outside the scope of this paper (but see Leung 2011; Yeh and Lewis 2004;Zhang 2012). Nonetheless,China’s year-on-year economic development has necessitated a parallel shift in the organization, efficiency and capital investment in energy required to enable continued growth. Concerns about the diversification of sources of generation capacity, and about the need for energy supply resilience through greater energy security, have paralleled the Chinese government’s recognition of the country’s energy industry as a key enabler of growth and progress.
The general outlines of China’s rapid economic growth are well known, but it is useful here to briefly link them to the parallel rise in the country’s energy demand. Although it has since slowed, in 2000-10, China’s GDP grew at a rate of over 8% per annum (p.a.) in real terms, with a high of 14.2% in 2007, and a low of 8.3% in 2001 (World Bank 2012). Taking a more extended temporal view, the average annual GDP growth rate over the period 1979-2008 was around 10% (Liu 2009). Underlying this rapid pace of economic growth, over the same time period primary energy consumption increased by 340%(Zhang and Cheng 2009). This was paralleled by significant increases in generation capacity to meet increasing consumption demand: in 2000-10, China’s generation capacity grew at an average annual rate of 11.84% (Nan & Moseley 2011), and total installed capacity doubled in 2003-2008, from 380 to 793 gigawatts (GW) (Wang and Chen 2010). In 2009 alone, the country added more than 90 GW of new generation capacity: this is more than the total current installed capacity in the United Kingdom. Even accounting for the rapid rise in hydroelectric power generation, most of the growth in generation has been fossil fuel-powered, showing a veritable ‘addiction to coal’ (Wang and Chen 2010, 1016).[2]By 2010, 76.5% of China’s energy was produced by coal. In contrast, hydroelectric power, wind power and nuclear power combined generated approximately 9.4% (National Bureau of Statistics of China 2011). By 2010, China had become the world’s largest producer and consumer of energy (BP 2014).
China’s current reliance on coal belies a significant focus on developing renewable energy sources, both from a generation capacity perspective and also in terms of renewable energy policy, research and development (R&D), manufacturing, and grid access (Lo 2014). The period since 2006, in particular, has seen: the strategic augmentation of wind and solar power; a focus on improving energy efficiency across industrial sectors(and in terms of transmission and generation); and the identification of renewable energy sources as key enablers for transition towards a future, decarbonised economy (Li 2010). By the end of the 2000s, for example, China had become the world’s largest wind power market (Li et al., 2010); by 2013 it had become the largest global solar photovoltaic (PV) market for new installations (EPIA 2014).
Corporate, governmental and other actors from a wide variety of national and economic contexts have prominently celebrated China’s focus on renewable energy. In a US Congress address in February 2009, president Barack Obama identified energy as the first of three key themes to focus on in securing the US’ economic future. And yet, it is telling that his first remarks on the topic of energy focused not on the US, but on China: he lauded China’s record on green energy, stating that:
‘We know the country that harnesses the power of clean, renewable energy will lead the 21st century.And yet, it is China that has launched the largest effort in history to make their economy energy efficient’ (Obama 2009).
This positive tone can be found across much of the political and academic focus on China’s green energy strategies. For example, in comparing South Korea and China’s industrial and economic strategies for transitioning to a ‘greener’ economic landscape, Mathews (2012, 1) stated that ‘China is now actively creating a new pattern of growth, based on lower levels of resource intensity, greater reliance on renewable energies, an explicit commitment to the circular economy and pricing of inputs to reflect their ecological significance’. However, by the early 2010s, China’s increasingly important role in the global renewable energy market started to be constructed in a range of more complex ways. Some of these were negative, focusing on identifying and framing specific fears around Chinese efforts to incentivize renewable energy. Theseframingsof China’s renewable energy sector highlight the role of energy as a mediator and interface between national sustainability strategies and global economic and geopolitical processes (Fischhendler et al., 2015, Waisman et al., 2014). China’s solar manufacturing and R&D industry has been central to these debates. The paper focuses on this juncture, between complex and at times contrasting representations of China’s solar industry.
The followinganalyses the framing of China’s solar energy industry by corporate, non-governmental and government actors in the US and EU, and the heterogeneous and at times contradictory sectoral identities produced about the Chinese solar industry by these often overlapping and unstable actor-networks. In so doing, the paper critically investigates the production of specific market knowledge(s) that are not only instrumental and rational, but based on often-contradictory discursive constructions of an apparently simply technological-economic phenomenon such as the production of solar modules. The analysis in this paper is rooted in work that understands markets (such as energy markets) and their emergence as not simply technically ‘economic’ (Mitchell, 2005), but as determined by complex, performative and relational webs of actor-networks, materialities and power relations (Berndt and Boeckler, 2010; Callon, 2007; Hall, 2012). Research along these lines has focused on the social and cultural construction of a range of economic sectors, from management consulting (David et al., 2013), to nanotechnology (Granqvist et al., 2013). The role of performance, relationality and of the discursive interactions of actors in producing specific outcomes and materialities has also been examined with regards to the emergence of specific products, as seen in Garud’s (2008) analysis of the importance of conferences as a vehicle through which new products such as cochlear implants emerge.In this vein, recent studies have identified the ways in which the green economy and its constituent sectors, such as carbon markets and renewable energies, are likewise performed entities and not simply technical constructs based on instrumental rationality (Knox-Hayes, 2010; Lansing, 2012).Therefore, an analytical approach sensitive to the ways in which the geographies of techno-scientific knowledge(s) are constructed and performed thus becomes key to understanding not simply the framing of environmental and energy conflicts, but also the creation of actually existing geopolitical energy landscapes which result from energy markets’ constructed, relational and performed nature (Calvert 2015; Geoghegan and Leyson 2012; Jones 2014).
The paper adopts a methodological and analytical framework informed by Critical Discourse Analysis (CDA) (Fairclough 2003), in which text and language is seen as a form of social practice. The paper’s analysis focuses on textual materials (for example, reports and press releases) produced by the categories of actors mentioned above, in order to engage with, and excavate, narratives produced by these actors (Hewitt 2009). Although the paper does not draw on interviews due to the large number of actors and market geographies involved, and the resultant budgetary research constraints, it acknowledges the fact that in future research, deploying a limited number of ‘helicopter interviews’ (Hajer 1996) would be useful. Nonetheless, the paper’s approach, focusing on documents and reports, draws on similar work carried out in critical studies of policy, and has been particularly useful in critically engaging with discursive practices in an intercultural setting (Agustín 2012).
Constructing a cultural economy of China’s solar industry
The following investigates the interplay of several sets of discourses that have coalesced around the development of China’s solar industry in 2006-2012. Environmental discourses can be seen as mechanisms of ‘meaning-making’ through which assemblages of particular phenomena (such as markets or sectors) are made sense of (Backer 2009; Onestini 2012). At the same time, discursive processes of meaning-making can be seen as part and parcel of selective strategies of representation: this is where power relations enter the fold, as meanings are defined by networks of actors with stakes in making sense of a socio-technical assemblage in specific ways. It is in this light that discourse can be seen as ‘framing’ particular assemblages: they ‘distinguish some aspects of a situation rather than others’ (Hajer 1995, 45).Indeed, the various ways in which actors both within and outside China(and those working across its borders) perform the solar industry and relate to each othercan be seen as a key component of the process of marketization (Caliskan and Callon 2010). As Berndt and Boeckler have argued, this involves:
‘the configuration of markets as an ambivalent play of framings […] and overflows (ie irritations, disjunctures, and paradoxes which surface when heterogeneous actors practically enact the model). The economic entities (markets, firms, commodity chains, etc) which emerge in this double process only ever acquire temporary stability’ (Berndt and Boeckler 2011, 1058).
In the case of the emergence of China’s solar industry, the paper analyses the discursive construction of the industry by non-Chinese actors (firms, policy executives, and others) in the US and the EU. These discursive actorsare intimately involved in framing, and performing,China’s solar sector outside the country’s borders. The following focuses on the ways in which China’s solar industry was performed and framed through recourse to discourses of market security. These discourses constitute a discursive arena which performs China’s solar industry as a government-backed sector, constituting a threat to ‘free trade’ in terms of trade relations and perceived market imbalances.
Analyses of the role of environmental discourse in the construction of materialities have tried to understand the mechanisms through which discourses operate and come to frame specific issues (Jerneck 2014). In a study of the strategies of discursive framing of the societal impacts of climate change by US science policy, Miller (2000) identifies narration, modelling, canonization and normalization as processes through which framing occurs. To this can be added to the process of framing through rationalization(Backer and Clark2008). For example, the recent ‘Green New Deal’ set of incentives for green industries publicised by various states, from the USA to South Korea, has been critiqued and shown to be based on ecologically modernizing discourses which did little to shine light on the interactions between economic crisis and environmental policy (Feindt and Cowell 2010). In this light, the selective backing of certain sectors or industries (such as the solar manufacturing industry) can be seen as an example of a neoliberal approach to economic-environmental crisis which alights upon a choice industry (in this case, the solar industry) that is then constructed through an ecologically modernizing lens as the solution not only to economic crisis and unemployment, but to wider geopolitical issues, such as energy security.
An aspect of the discursive construction of the Chinese solar industry that must be acknowledged is the North-South(and East-West) aspect of the framing of a rising industrial sector in the context of a rapidly developing country (Nickum 1999). In light of the paper’s analysis of a trade war between the US, the EU and China, awareness of this aspect is crucial in allowing for critical analysis.Furthermore, it is important to remain aware of the potentially colonial aspects of the narratives deployed to describe and construct elements of social life outside the Global North (Escobar 1995). In the case of framings of the rise of the solar industry in China, this is particularly relevant because specific framings by non-Chinese actors could be seen asconstituting what Mohanty (1988) terms a ‘colonialist move’, whereby discourse is produced under conditions of unequal relations of power. In the case of China’s solar sector, such unequal relations of power could be seen in discourses produced by Western media, and in the side-lining of discourses of resistance or opposition to negative framings of the industry. In this sense, therefore,discursive construction of the Chinese solar sector allows non-Chinese actors ‘the exercise of power over it’ (Escobar 1995, 9). While a comprehensive, critical analysis of this aspect of discourses around the emergence of the Chinese solar industry lies outside the scope of this paper, it is nevertheless noted here as a potential factor influencingspecific discursive framings.
The development of China’s solar energy industry, 2006-2010
The emergence of China’s solar industry has beenenabled by its designation, in the Chinese government’s energy policy, as a strategic development target. Even then, its quick rise, in China and abroad, has been described as rapid and unpredictable (Jean et al., 2015). Although the take-off moment for China’s solar energy industry was in 2006, it should be noted that the country started producing PV cells in 1973, and that the solar thermal market was well-established by 2000: indeed, by 2002, 10 million square metres of solar thermal applications had been installed countrywide (Zhiqiang 2005).The solar PV market had started developing before the 2006 watershed year. PV production had started rising in the early 20002, albeit from a minimal base. In 2003-06, for example, the yield of solar PV in China increased from 12MW to 400MW (Liu et al., 2010). By 2007, this had risen to over 1,200MW.
Zhang et al. (2014) have identified four main stages in the development of China’s solar PV industry. In the first stage, from the mid-1990s to circa 2003, the government supported rural electrification policies. While this increased domestic cumulative PV capacity, overall PV capacity was still minimal by 2003. Furthermore, while key corporate players were founded during this time, such as Trina Solar and Yingli, Chinese solar PV firms were yet to enter the global market in a significant way (Ibid.). The second stage, between 2004 and 2008, saw the enactment ofgovernment strategies aimed at aiding PV industries by incentivising exports. Up to and including the initial stages of the 2008 global financial crisis, China’s support for renewables was motivated by a strategic desire to develop a key national industrial sector while increasing energy security (Hallegatte et al., 2013). At this time, the world’s largest solar market was the EU, so the Chinese state focused on supply-side supporting strategies, including direct subsidies aimed at galvanizing exports. This had the effect of helping to promote domestic manufacturing: as Goodrich et al. (2013) have shown, while over 90% of manufacturing capacity for PV firms with operations or headquarters in the US is abroad, in the case of China, 99% of manufacturing capacity for Chinese solar corporations resides within China.
When the EU solar market suffered as a result of the 2008 crisis, the Chinese solar PV industry entered its third stage of development (Zhang et al., 2014). Government support for solar PV shifted to enhancing domestic demand through domestic (national at first, then regional) feed-in tariffs and grid-integration incentives (Hallegatte et al., 2013). This included domestic subsidy programmes such as the Golden Roofs and other rooftop installation subsidies. Goodrich et al. (2013) have shown than government support for solar PV in China in turn enabled a competitive advantage for Chinese PV corporations in terms both of scale and supply chain advantages: for example, while in 2013 the average PV manufacturing plant in the US had a production capacity of 500MW, in China the average PV manufacturing plant had a capacity of 2,000 MW (Ibid.). Furthermore, Goodrich et al. (2013) have demonstrated that the advantages of low-cost labour in Chinese solar PV manufacturing are more than offset by other factors, such as high inflation and country-specific risks. This highlights the importance of scale and supply chain advantages in the emergence of China’s solar PV manufacturing industry.