Solar Dispute Between China and USA Escalates

Chinese solar power companies have launched the latest attack in a dispute with their American competitors over allegedly unfair trade practices. The American solar power companies have complained that Chinese solar power companies are dumping their products on the American market at artificially low prices in order to take over the American solar energy market. The United States Commerce Department announced earlier in November that it was investigating the claims. Chinese authorities struck back last week when the Chinese Ministry of Commerce announced that it was opening an investigation into subsidies for renewable energy products that were granted across the United States to American manufacturers of solar power equipment. The move by the Chinese Ministry of Commerce raised concerns that the dispute between American and Chinese companies in the renewable energy sector could spark a broader trade war between the world's two biggest economies. The Chinese companies are now trying another strategy, claiming that the investigation by American authorities will cost America jobs and hurt consumers. The Chinese solar companies say that because American companies are both major suppliers and customers of the Chinese companies' products, any sanctions imposed on the Chinese manufacturers could cost America jobs and drive up the prices of renewable energy products. The Chinese companies are also saying that any success that they are enjoying is because of their competitive advantages, not unfair business practices. The current dispute between American and Chinese solar power companies reflects growing tensions between the two countries over a broad range of economic and political issues.

Traders who believe that China and the United States will avert a trade war might want to consider the following trades:

Traders who believe that the row between Chinese and American solar companies is could escalate into an all out trade war may consider an alternate positions: