The Coalition for American Solar Manufacturing (CASM) recently announced it has commended two internationally known academicians on their new research and book about China’s systematic approach to industrial and export subsidies to seize world market dominance. CASM said the book shines urgently needed light on the alarming role of Chinese government subsidies in precipitously mounting industrial and export expansions that can undercut prospects and jobs accompanying U.S. participation in key industries, including solar technology production.
The CASM praised Subsidies to Chinese Industry: State Capitalism, Business Strategy, and Trade Policy by Usha C.V. Haley and George T. Haley. The book explores China’s “hidden advantage” of subsidies for strategic, capital-intensive industries as well as their trade, government and business impacts within the steel, glass, paper, auto parts, and solar industries.
“Our findings contradict the widespread belief that China’s enormous success as an exporting nation derives primarily from low labor costs and deliberate currency undervaluation,” the authors write.
The book also points out a solar industry paradox: “The provision of lower costs through subsidies has removed firms’ incentives to lower costs through economically sound actions that result in achieving economies of scale and in shedding excess production capacity. Thus, many Chinese firms are economically inefficient in relation to their non-Chinese competitors, but Chinese subsidies overcome those inefficiencies and make those firms globally competitive.” In the meantime, CASM contends that China’s policies put more efficient non-Chinese companies and employees out of commission.
Moreover, the Haleys argue, the Chinese subsidization leads to manufacturing overcapacity, which affects both domestic and foreign producers, and inhibits consolidation among Chinese producers that otherwise would occur. Many Chinese producers would otherwise go out of business, they say.
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