(Reuters) – Some of the largest Chinese solar factories in Vietnam are cutting production and laying off workers, spurred by the expansion of U.S. trade tariffs targeting Vietnam and three other Southeast Asian countries.
Meanwhile, a slew of new Chinese-owned solar plants are popping up in nearby Indonesia and Laos, beyond the reach of Washington’s trade protections. Their planned capacity is enough to supply about half of the panels installed in the US last year, according to Reuters reporting.
Chinese solar companies have repeatedly cut production at existing hubs while building new factories in other countries, allowing them to avoid tariffs and dominate U.S. and global markets despite successive waves of U.S. tariffs over more than a decade intended to to keep this in check.
Although Chinese companies have been shifting their solar production for years, the extent of the shift to Indonesia and Laos in this latest phase has not been previously reported. More than a dozen people in five countries were interviewed for this article, including employees of Chinese factories, officials of non-Chinese solar companies and lawyers.
“It’s a huge cat-and-mouse game,” said William A. Reinsch, a former trade official in the Clinton administration and a senior adviser at the Center for Strategic and International Studies.
“It’s not that hard to move. You set it up and you play the game again. The design of the rules is such that the US is usually one step behind.”
According to SPV Market Research, China accounts for about 80% of the world’s solar energy shipments, with its export hubs elsewhere in Asia making up much of the rest. This is in stark contrast to twenty years ago, when the US was the world leader in the sector.
U.S. solar imports, meanwhile, have tripled since Washington began imposing tariffs in 2012, reaching a record $15 billion last year, according to federal data. While almost none came directly from China in 2023, about 80% came from Vietnam, Thailand, Malaysia and Cambodia – home to factories owned by Chinese companies.
Washington imposed tariffs on solar exports from those four Southeast Asian countries last year and expanded them in October after complaints from manufacturers in the United States.
At least four Chinese or China-linked projects have been launched in Indonesia and Laos over the past 18 months, and two more have been announced. Together, the projects have a total of 22.9 gigawatts (GW) of solar cell or panel capacity.
Much of that production will be sold in the United States, the world’s second-largest solar market after China, and one of the most lucrative. According to PVinsights data, U.S. prices have averaged 40% higher than China over the past four years.
U.S. solar manufacturers have repeatedly stated in trade complaints filed with the U.S. government that they cannot compete with cheap Chinese products that they say are unfairly supported by subsidies from the Chinese government and the Asian countries from which they export.
Chinese solar companies have countered that their mastery of the technology makes them more competitive on price.
Tariffs are a major issue in the US election, with Republican former President Donald Trump proposing tariffs on all US imports to boost US manufacturing, including a 60% tariff on all goods from China. His rival, Democrat Vice President Kamala Harris, has said Trump’s plan would raise costs for American consumers.
However, lawmakers on both sides of the aisle have shown support for tougher tariffs on China’s solar energy supplies to fuel a domestic supply chain.
“Going forward, the American public should demand much stricter enforcement of tariffs, especially around (Chinese) use of third countries to violate U.S. trade laws,” said Republican Congressman John Moolenaar, chairman of the House Select Committee on China , to Reuters.
The US Commerce Department, the White House and the Chinese Commerce Ministry did not respond to Reuters requests for comment.
PAIN IN VIETNAM
The most immediately visible impact of the latest US tariffs, which have pushed total tariffs for some producers to more than 300%, has been in Vietnam’s solar sector.
In August, Reuters visited industrial parks in northern Vietnam owned by Chinese companies, including Longi and Trina Solar, and spoke to workers.
In Bac Giang province, hundreds of workers at a large factory complex owned by Longi Green Energy Technology’s Vinasolar unit lost their jobs this year, two workers with knowledge of the matter said.
The company was using only one of the industrial estate’s nine production lines, one of them said.
In Thai Nguyen, another province, Trina Solar has shut down one of its two factories producing solar cells and panels, two workers there said.
Employees at both companies declined to be identified due to the sensitivity of the issue.
Longi did not respond to Reuters requests for comment. The company said in June it had suspended production at a Vietnamese solar cell factory, but did not provide details. Trina declined to comment. It said in June that some facilities in Vietnam and Thailand would be closed for maintenance without further details.
While U.S. solar import data shows shipments from Vietnam rose nearly 74% through August, industry analysts have attributed the jump to early loading of exports to stay ahead of this year’s U.S. tariffs.
The Vietnamese government did not respond to requests for comment.
NEW EXPORT BASES, AMERICAN PLANTS
Chinese solar companies are flocking to Indonesia, motivated by tariffs on Vietnam, according to Indonesian Industry Ministry official Beny Adi Purwanto, who cited Thornova Solar as an example. Thornova says on its website that its Indonesian factory has an annual capacity to build 2.5 GW of solar panels and 2.5 GW of solar cells for the North American market.
A new 1 GW Trina module and cell factory will be fully operational and expand capacity by the end of 2024, Beny said. He noted China Lesso Group’s solar module factory, which has a production capacity of 2.4 GW.
China-linked New East Solar also announced a 3.5 GW panel and cell factory in Indonesia last year.
The Chinese companies did not respond to Reuters requests for comment.
The shift to Indonesian production has been sharp and rapid, according to an executive at a U.S. solar company, who was told by his Chinese supplier in Indonesia that they are being flooded with large orders from major Chinese companies looking to export to the United States .
“The scale is completely different,” said the manager, who asked not to be identified.
Solar energy exports from Indonesia to the U.S. nearly doubled to $246 million through August 2024, according to federal data.
Solar companies looking for greener pastures in Laos include Imperial Star Solar. The company, which has Chinese roots but has most of its production in Cambodia, opened a wafer factory in Laos in March, which should eventually have a capacity of 4 GW.
The move, the company said in a statement at the time, helped it avoid U.S. tariffs.
SolarSpace also opened a 5 GW solar cell factory in Laos in September 2023. The primary purpose of transferring production capacity to Laos was not related to U.S. tariffs, the company said in a statement to Reuters, but did not elaborate.
Solar energy exports from Laos to the US were non-existent in the first eight months of last year, but were worth about US$48 million through August 2024.
Others go further afield.
JinkoSolar said in July it had signed a nearly $1 billion deal with partners in Saudi Arabia to build a new 10 GW solar cell and module factory in the kingdom.
Construction of U.S. solar plants by Chinese companies is also increasing as they too look to benefit from U.S. incentives.
According to a Reuters analysis, Chinese companies will have at least 20 GW of annual solar panel production capacity on U.S. soil in the coming year, enough to serve about half of the U.S. market.
(Reporting by Lewis Jackson in Sydney, Phuong Nguyen in Hanoi, Colleen Howe in Beijing and Nichola Groom in Los Angeles; additional reporting by Stefanno Sulaiman in Jakarta, Francesco Guarascio and Khanh Vu in Hanoi, David Kirton in Shenzhen and Alexandra Alper in Washington; Editing by Richard Valdmanis and Edwina Gibbs)
