Is China Cheating in the Solar Industry?

The Chinese solar industry (NYSE:TAN) has been accused of using billions of dollars in government subsidies to help gain sales in the American market. Seven American makers of solar panels filed a broad trade case in Washington against the industry accusing China (NYSE:FXI) of dumping solar panels in the United States for less than it costs to manufacture and ship them.

If successful, the case would drive up the price of solar energy (NYSE:TAN) in the name of trying to breathe life into a flagging American industry. Solar power has already been kept from becoming more than a niche energy source in the United States due to high costs. In August, Solyndra and two other American solar energy companies filed for bankruptcy protection, citing the plunging prices of solar technology from China, and republicans argue that federal loan guarantees of more than a half-billion dollars to the now-bankrupt solar company show the error of the administration’s efforts to guide industrial policy in that field. Meanwhile, many of the surviving companies have been laying off workers and closing factories, or setting up shop in China (NYSE:FXI).

“The White House on Wednesday declined to comment on the solar trade filing. But President Obama recently appeared to support the American solar industry’s concerns. In a White House news conference on Oct. 6 he said: “Even if the technology was developed in the United States, they end up going to China because the Chinese government will say, ‘We’re going to help you get started, we’ll help you scale up, we’ll give you low-interest loans or no-interest loans, we will give siting, we will do whatever it takes for you to get started here,’” according to The New York Times.