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Chinese solar firms build new plants in Indonesia and Laos

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U.S. has expanded tariffs on other Southeast Asian nations

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In Vietnam, Chinese solar companies cut output, lay off

workers

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For a related graphics story on the history of US solar

tariffs

please click here

(Adds link to graphics story in bullet point)

By Lewis Jackson, Phuong Nguyen, Colleen Howe and Nichola

Groom

Nov 4 (Reuters) - Some of the biggest Chinese-owned

solar factories in Vietnam are cutting production and laying off

workers, spurred on by the expansion of U.S. trade tariffs

targeting it and three other Southeast Asian countries.

Meanwhile, in nearby Indonesia and Laos, a slew of new

Chinese-owned solar plants are popping up, out of the reach of

Washington's trade protections. Their planned capacity is enough

to supply about half the panels installed in the U.S. last year,

Reuters reporting shows.

Chinese solar firms have repeatedly shrunk output in

existing hubs while building new factories in other countries,

allowing them to sidestep tariffs and dominate the U.S. and

global markets despite successive waves of U.S. tariffs over

more than a decade designed to rein them in.

While Chinese firms have been moving their solar

manufacturing for years, the scope of the shift to Indonesia and

Laos in this latest phase has not previously been reported.

More than a dozen people in five countries, including employees

at Chinese plants, officials at non-Chinese solar companies and

lawyers were interviewed for this article.

"It's a huge cat and mouse game," said William A. Reinsch, a

former trade official in the Clinton administration and senior

adviser at the Center for Strategic and International Studies.

"It's not that hard to move. You set up and you play the

game again. The design of the rules is such that the U.S. is

usually one step behind."

China accounts for about 80% of the world's solar shipments,

while its export hubs elsewhere in Asia make up much of the

rest, according to SPV Market Research. That's a sharp contrast

to two decades ago when the U.S. was a global leader in the

industry.

America's imports of solar supplies, meanwhile, have tripled

since Washington began imposing its tariffs in 2012, hitting a

record $15 billion last year, according to federal data. While

almost none came directly from China in 2023, some 80% came from

Vietnam, Thailand, Malaysia and Cambodia - home to factories

owned by Chinese firms.

Washington slapped tariffs on solar exports from those four

Southeast Asia nations last year and expanded them in October

following complaints from manufacturers in the United States.

Over the last 18 months, at least four Chinese or

China-linked projects have begun operations in Indonesia and

Laos, and another two have been announced. Together, the

projects total 22.9 gigawatts (GW) in solar cell or panel

capacity.

Much of that production will be sold in the United States,

the world's second-biggest solar market after China and one of

the most lucrative. U.S. prices have on average been 40% higher

than those in China over the past four years, according to data

from PVinsights.

U.S. solar producers have repeatedly stated in trade

complaints lodged with the U.S. government that they can't

compete with cheap Chinese products that they say are unfairly

supported by subsidies from the Chinese government and the Asian

countries they export from.

Chinese solar firms have countered that their mastery of the

technology makes them more competitive on price.

Tariffs are a key theme in the U.S. election, with

Republican former President Donald Trump proposing levies on all

U.S. imports to stimulate U.S. manufacturing, including a 60%

rate on any goods from China. His rival, Democrat Vice President

Kamala Harris has said Trump's plan would raise costs for U.S.

consumers.

Lawmakers on both sides of the aisle, however, have shown

support for tougher tariffs on China's solar shipments to

nurture a domestic supply chain.

"Going forward, the American public should demand much

stricter enforcement of tariffs, especially around (China's) use

of third countries to break U.S. trade law," Republican

Congressman John Moolenaar, Chairman of the House Select

Committee on China, told Reuters.

The U.S. Department of Commerce, the White House and China's

commerce ministry did not respond to Reuters requests for

comment.

PAIN IN VIETNAM

The most immediate visible impact of the latest U.S.

tariffs, which have brought total duties to more than 300% for

some producers, has been in Vietnam's solar sector.

In August, Reuters visited industrial parks in northern

Vietnam owned by Chinese-owned companies including Longi and

Trina Solar, and spoke with 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

employees with knowledge of the matter said.

The company was using just one of nine production lines in

the industrial park, one of them said.

In Thai Nguyen, another province, Trina Solar

has idled one of its two factories making solar cells and

panels, two employees there said.

The employees at both companies declined to be identified

due to the sensitivity of the issue.

Longi did not respond to Reuters requests for comment. It

said in June it had suspended output at a Vietnamese solar cell

plant but did not provide details. Trina declined to comment. It

said in June that some facilities in Vietnam and Thailand would

be shut down for maintenance without elaborating.

While U.S. solar import data shows shipments from Vietnam up

almost 74% through August, industry analysts have attributed the

jump to the frontloading of exports to get ahead of this year's

U.S. tariffs.

Vietnam's government did not respond to requests for

comment.

NEW EXPORT BASES, US PLANTS

Chinese solar companies are flocking to Indonesia motivated

by the tariffs on Vietnam, according to Indonesian industry

ministry official Beny Adi Purwanto who cited Thornova Solar as

an example. Thornova says on its website its Indonesian plant

has annual capacity to build 2.5 GW of solar modules and 2.5 GW

of solar cells for the North American market.

A new 1 GW Trina module and cell plant will be fully

operational by end 2024 and will expand capacity, according to

Beny. He noted China Lesso Group's solar module plant which has

2.4 GW in production capacity.

China-linked New East Solar also announced a 3.5 GW

panel and cell plant in Indonesia last year.

The Chinese companies did not respond to Reuters

requests for comment.

The shift to Indonesian production has been sharp and swift,

according to one manager at a U.S. solar firm who was told by

their Chinese supplier in Indonesia that they're inundated with

big orders from major Chinese firms looking to export to the

United States.

"The scale is totally different," said the manager who

declined to be identified.

Solar exports from Indonesia to the U.S. nearly doubled

to $246 million through August of 2024, according to federal

data.

Solar companies seeking greener pastures in Laos include

Imperial Star Solar. The firm, which has Chinese roots but most

of its production in Cambodia, opened a Laos wafer plant in

March slated to eventually have 4 GW in capacity.

The move, it said in a statement at the time, helped it

sidestep U.S. tariffs.

SolarSpace also opened a 5 GW solar cell plant 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 exports from Laos to the U.S. were non-existent in the

first eight months of last year but were worth some $48 million

through August of 2024.

Others are going further afield.

JinkoSolar ( JKS ) said in July it had signed an almost $1

billion deal with partners in Saudi Arabia to build a new 10 GW

solar cell and module plant in the kingdom.

Construction of U.S. solar-manufacturing plants by

Chinese companies is also surging as they too seek to take

advantage of U.S. incentives.

Chinese companies will have at least 20 GW worth of annual

solar panel production capacity on U.S. soil within the next

year, enough to serve about half the U.S. market, according to a

Reuters analysis.