Chinese solar firms bank on overseas expansion to survive amid US tariffs

The Star

15-06-2025

Chinese solar and energy-storage companies will continue to press ahead with their overseas expansion with or without a long-term agreement on trade tariffs, as production abroad holds the key to their long-term survival, according to executives at China's largest solar industry exhibition.
Although the US and China reached a 90-day truce in their ongoing tariff war in May, solar panel exports from China and Southeast Asia to the US are still subject to tariffs of as much as 3,521 per cent, with Washington citing unfair trade practices such as subsidies and dumping for the high levies.
'The industry used to say that you either go overseas or exit the game,' said Gao Jifan, chairman of Trina Solar, one of the world's largest solar-panel manufacturers, at the SNEC PV+ Photovoltaic Power Conference and Exhibition in Shanghai. 'Now, due to tariffs, simply exporting isn't enough; you must also localise production abroad.'
Chinese firms are increasingly diversifying their production base in response to the trade tensions. Currently, about 80 per cent of existing Chinese solar manufacturers' overseas capacity – solar wafers, solar cells and modules – was in Southeast Asia, according to data from S&P Global Commodity Insights.
However, nearly 80 per cent of their planned overseas capacity expansion was in the Middle East and Africa, followed by the US and Europe, it added.
'There is no clear indication of whether the tariffs will increase or decrease after the 90-day pause,' said He Lipeng, vice general manager of Qingdao Haier Energy Technology, the solar and energy-storage unit of Chinese electronics giant Haier Group. 'However, if tariffs were to rise to 200 per cent, [exports] would be impossible.'
Haier Energy was considering using the US plants of its parent company, acquired from GE Appliances in 2016, to produce solar photovoltaic (PV) and energy-storage equipment, He said.
The facilities are currently used for manufacturing consumer durables like refrigerators and washing machines for the US. He said no decision had been made on when the switch to manufacturing solar products would be made.
The mood at the four-day event, which attracted some 3,000 companies from more than 100 countries, was sombre. Chinese solar PV companies, which dominate more than 80 per cent of global manufacturing capacity, have voiced concerns about the prolonged price war, expected to worsen this year, and challenging geopolitical conditions.
You Xin, an analyst at S&P Global, said a sharp decline in planned capacity in Southeast Asia was due to the devastating US tariffs.
As the US remained the most attractive market due to its high margins and size, the restrictions were forcing Chinese companies to divert capacities to other regions where the US tariffs were lower, she said.
The Middle East and Africa were favourable destinations due to conducive government policies and huge demand, she added.
The Middle East's cumulative solar capacity was projected to reach 160 gigawatts (GW) by 2033, an eightfold increase from 2023, because of ambitious national targets, according to Wood Mackenzie. Similarly, Africa's solar PV market was promising, with 140GW of new grid-connected capacity expected by 2033, with a third of these installations projected to come from Egypt and South Africa, the consultancy added.
Jinko Solar was expanding its Middle East capacity with a 10GW solar project in Saudi Arabia, chairman Li Xiande said at a briefing hosted by the Shanghai Stock Exchange last month.
CSI Solar, an affiliate of Nasdaq-listed Canadian Solar, was eyeing the Middle East, CEO Zhuang Yan said at the same briefing. Work was also progressing on CSI's 5GW solar module project in the US, which was expected to reach designed capacity in the second half of this year.
'In this industry, when we establish production capacity in various countries, it's not meant for those local markets,' said Zhang Haimeng, vice-president and chief sustainability officer of Longi, the world's third-largest solar-module maker.
'Whether [the capacity is] in Southeast Asia, Saudi Arabia, Oman or Ethiopia, the goal is to sell to the US. Building capacity based on local demand doesn't make economic sense; it's all geared towards the US market,' he said at the Shanghai solar conference this week. - SOUTH CHINA MORNING POST