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China India Trade Deficit rises to Sinister Heights of $27 Billion Officially and Much more Unofficially

3 Feb, 2012

China India Trade has been rising at very high growth rates over the last few years driven by the booming GDP growth in the fastest growing economies of the world. However India like other countries faces the mounting problem of a huge trade deficit with China which is growing all the time. Like Brazil ,USA this has become a major problem . Beside the official reported figures , there is a large clandestine trade takes place outside the normal channels. Massive imports from China go unreported to avoid excise duties and custom taxes. Both countries have corrupt officials and businessmen which facilitate trade without paying of taxes and duties. Unofficial Trade Deficit with China may be double the $27 billion reported in 2011.

Rising China and India Tensions

India and China are the Two Rising Global Behemoths with Relations between these most populated countries always being tense.Both countries share a similar history of colonization by Western Powers in the 17-20th Centuries and Independence being attained in the middle of the 20th Century.China and India also shared the same economic trajectory until 1979 when Market Reforms put China on track to become the 2nd largest economy in 2010.India also embarked on Reforms in 1991 and has started showing fast economic growth in recent times.The relations between these 2 countries are tense since the Border War fought between them in 1962.They have one of the longest borders in the world which is disputed.China recently upped the ante on claiming territorial rights over India’s North Eastern State of Arunachal Pradesh.

China’s Recent Provocations

Chinese provocations against India have been rising in recent times as the Chinese leadership wants to keep India off tilt.Here is a list of recent provocations against India

1) Stapling of separate visas for India’s citizens from the state of Jammu and Kashmir which is disputed with Pakistan

2) Trying to stall an ADB Loan to India’s state of Arunachal Pradesh

3) Support in Building Nuclear Reactors in Pakistan which regards India as an existential threat.It has also supplying Pakistan with missiles and fighter aircraft.

4) Denial of visa to India’s top ranking military official on flimsy grounds leading to suspension of military contacts between the 2 countries

5) Stationing of 11,000 troops in Gilghit Pakistan Occupied Kashmir (POK) which India regards as a part of its own territory and over which India and Pakistan have fought 3 wars

Many of India’s top companies like BHEL,L&T are being hollowed out by Chinese competition of low cost goods and super cheap financing. Power, Telecom equipment form a major chunk of imports while India is primarily exports resource like iron ore. So what is happening is that India is become a resource vassal economy of China (though it may sound simplistic) . China puts up big trade barriers for India’s value added exports like pharma and Information Technology while putting no hurdles for import of resources.With the rapid growth rate of imports , India is in danger of becoming dependent on China for a number of goods as its industries shut down in the face of competion.

China captures almost Half of the Power Equipment Market in India raising Concerns

India’s private players like Tata Power,Reliance Power and others are in the process of setting up massive mega coal plants using supercritical boiler technology.While L&T and BHEL,the two Largest Capital Equipment Companies have won a lot of orders,the sheer scale of Demand requires Huge Imports as well.Low cost Chinese equipment providers like Shanghai Electric and Dongfang Electric have won almost half of the power equipment orders raising concerns amongst the Indian administrators.

Solar Panels are a good example of one such good where Indian industries can’t compete in the face of Chinese subsidies to its own companies.

The Indian government is not going to impose any new duties on imports of Chinese solar cells. This is despite the petition by the Indian solar panel manufacturers to give a level playing field. Note Chinese solar panels have virtually destroyed the solar manufacturing industry in the West with big companies falling under the relentless price pressure where solar panel prices have gone down by 60% in one year. Only the Koreans seem to be standing up to the Chinese government backed top tier solar companies from China. The rest have mostly folded up and are facing survival questions including those from Taiwan. Indian solar companies were never that big and cost competitive anyway given the headstart and support of the Chinese backed companies. The price crash in 2011 has seen most of them close their factories as they can’t even cover their costs at the Gross Margin Level.

India China relations have never been that great on a geopolitical level with the 1962 War and unresolved border dispute in the north. Recently the imports of Chinese telecom equipment from Huawei and ZTE raised a massive ruckus with Indian telecom companies supporting the Chinese because of low cost equipment while security concerns were raised.

China has recently been in the news over Internet Espionage on defense and sensitive installations in India and USA. This has led to the high profile exit of Google from China.Recently a Canadian research organization revealed/alleged how Chinese govt backed hackers had broken into Indian embassy and government computers.This has made the Indian government wary of allowing Chinese equipment suppliers into India’s communication sector.Though both ZTE and Huawei’s equipment is much cheaper compared to Nokia Siemens,Alcatel and Ericsson , these companies face an uphill battler in India right now.

Rising Trade Deficit Concerns

India’s trade deficit with China is estimated to reach $60 billion by 2014-15, up nearly three-fold from $23 billion in 2010-11. Bilateral trade with China was $63 billion in 2010-11, with China accounting for $43 billion worth of imports.

“Participants at the inter-ministerial workshop were especially worried about forecasts that China could account for 75% of India’s manufacturing in the next five years, up from the present 26%,” the official said. The workshop was attended by officials of key ministries and departments, including finance, home and the department of industrial policy and promotion.

“Excessive dependence can be disruptive in case of strained relations,” said Narendra Sisodia, a defence analyst and former additional secretary of NSC Secretariat. In general terms, if a country that is supplying basic components to another stops supplies, it would hurt the importing country because its manufacturing will be adversely affected, he said. “Much also depends on whether a country has alternative sources of supply and how quickly those could be mobilised.”

More Western Solar Companies Q-Cells, Miasole ,Nanosolar Teeter on Bankruptcy

27 Jan, 2012

Solar Energy

The Chinese Dominance of the Solar Industry in the last 2 years have seen numerous Western companies go bust . This has accelerated sharply in 2011 with companies like Evergreen Solar,Spectrawatt, Solar Millenium, Solon, Photowatt etc. either gone for good or in various stages of bankruptcy. Other US Solar Panel Manufacturers like First Solar, Sunpower have fired thousands and some are continuing with large losses. European Solar Companies are the worst off given their high cost structure and lack of differentiation. Solland Solar recently killed its solar module line while some like Schott have killed their solar wafer lines.

Solar Jobs have been cut in the tens of thousands this year by a number of European Solar Companies including marquee names such as REC, Q-Cells, Solarworld ,SMA Solar besides many of the smaller names. Some of the solar companies like Solon have completely shut down. 5000 solar companies have downed shutters in 2011 according to German association BSW. This is despite global solar demand in 2011 increasing by around 30-40% compared to 2010. The reason is that massive overcapacity has been created in China and other parts of Asia. Backed by cheap loans and massive subsidies, around 50 GW of solar panel capacity has been created . This has led to a crashing of solar panel prices by 60% which has decimated the higher cost companies in Europe.

In fact some of the biggest solar companies in the world like LDK and Sunpower would have been bankrupt as well but for the support of others. Solar Panel company Solland Solar of Netherlands is shutting down its module operations firing 100 workers. This is after selling its solar cell operations. Expect other remaining European companies to shut down as well though Solarworld is hoping to bring an anti-dumping duty against Chinese solar panels in Europe as well.Note in the past European solar companies have tried various ruses such as shifting solar factories to Asia . However that option is not open to the smaller fry who have no option but to die .

Now a new wave of bankruptcies are on the way with Q-Cells likely facing a credit event as it needs to roll over convertibles which come due in February. Note Q-Cells has fallen a long way from being the biggest solar cell company in 2008. Miasole and Nanosolar were Private Equity backed CIGs darlings that were supposed to become the biggest thing following Firsst Solar . Now Nanosolar faceds executive exits while Miasole has fired large number of its workforce failing to find a big parent to support it. Note the smaller companies like Ascent Solar have found backers in Asia . Solar Technologies are seeing Darwin Survival of the Fittest with crystalline silicon solar panel technology beating out thin film solar and solar thermal technologies

Q-Cells SE (QCE), once the world’s largest maker of solar cells, fell to the lowest on record after a regional court said it can’t defer payment of a 202 million-euro ($263 million) corporate bond due next month.

Q-Cells fell 18 percent to 41 euro cents at the close in Frankfurt, the lowest since it started trading in 2005. The company, based in Thalheim, Germany, said holders of the 2012 bonds will receive partial payments in tranches as it seeks to restructure convertible bonds due in 2014 and 2015 in a debt-to- equity swap. It forecast operating losses through 2013.

Miasole Firings

According to a report published by greentechsolar, CIGS maker MiaSolé has let 10% of its workforce go, with most of the layoffs taking place in the engineering and equipment design divisions. The report claims that a company spokesperson verified the layoffs, but did not specify on the extent of the reduction in the workforce. The report from greentechsolar further stated that while, at one time, MiaSolé was producing 15,000 modules per week, various sources have specified that its production numbers have dropped significantly.

Solar Jobs Cut by Dutch Company Solland as European Solar Panel Industry Dies

19 Jan, 2012

Europe,Solar Energy

Solar Jobs have been cut in the tens of thousands this year by a number of European Solar Companies including marquee names such as REC, Q-Cells, Solarworld ,SMA Solar besides many of the smaller names. Some of the solar companies like Solon have completely shut down. 5000 solar companies have downed shutters in 2011 according to German association BSW. This is despite global solar demand in 2011 increasing by around 30-40% compared to 2010. The reason is that massive overcapacity has been created in China and other parts of Asia. Backed by cheap loans and massive subsidies, around 50 GW of solar panel capacity has been created . This has led to a crashing of solar panel prices by 60% which has decimated the higher cost companies in Europe.

In fact some of the biggest solar companies in the world like LDK and Sunpower would have been bankrupt as well but for the support of others. Solar Panel company Solland Solar of Netherlands is shutting down its module operations firing 100 workers. This is after selling its solar cell operations. Expect other remaining European companies to shut down as well though Solarworld is hoping to bring an anti-dumping duty against Chinese solar panels in Europe as well.Note in the past European solar companies have tried various ruses such as shifting solar factories to Asia . However that option is not open to the smaller fry who have no option but to die .

Schott Solar fires 290 workers

The number of solar factories closing in Europe has increased tremendously in the 2nd half of 2012 despite a record surge in Germany which would have raised 2011 solar growth to 25%. However the relentless price pressure from Chinese solar panel companies has decimated the solar companies in the West. While there have been a number of famous cases of bankruptcy like Solyndra and Solon, there have been bigger solar factory closedowns. REC has closed down more than 1 GW of wafer capacity while a pure play Spanish solar wafer factory also closed down recently . British solar wafer maker PV Crystalox is also near the verge of failure. Solar Wafer prices have fallen by almost 60% in the last 1 year with the prices much below the cost of production in Europe. It seems unlikely that any solar wafer maker will remain alive in Europe by 2013.

Q-Cells move to Malaysia

Solar Factories in US and Europe have been closing at a rapid clip over the last 2 years as Solar Panel Prices have come crashing down.Earlier the higher cost factories were able to survive due to non-existent Asian players and benign competitions.But with the rise of the Asian Solar Companies,the European and US Companies have faced very tough times.Q-Cells closed most of its German Solar Cell Manufacturing Lines even as it ramps up a factory in Malaysia.While there have been isolated cases of module factories being opening in Germany,Most of the Major Manufacturers like REC and Q-Cells are moving lock,stock and barrel to Asia.REC is already stepping up production at its 1 GW integrated solar plant in Singapore while Q-Cells manufacturing is also migrating to Malaysia.

Note this is not restricted to Europe.Japanese solar factories are being closed and shifted to Asia. USA Solar Jobs are also being moved to Mexico and other places.

Sharp which has managed till now to survive with its high costs in Japan factories too is now facing the pressure.Japanese market is highly protectionist with majority of the demand going to Japanese zaibatsus.The Japanese government is helping Solar Companies with subsidies/diplomacy to sell Japanese solar panels in Asia and Africa.Sharp now is being forced to move off the islands of Japan as the high cost of labor and currency makes it uncompetitive in the fiercely cutthroat solar panel global market.Sharp has a giant thin film silicon factory in Sakai and cell/module operations spread out in Japan.It will now manufacture more of its cells/modules overseas to cut down on the cost which are much higher than the Chinese.Note while Sharp is still a long way in suffering the fate of the likes of Evergreen Solar,there is no doubt that it is under huge pressure.Read my earlier post on Sharp’s position in the solar industry

Indian Imports of Chinese Solar Cells to Continue despite Indian Panel Factory Closures

19 Jan, 2012

Energy,Solar Cells,Solar Energy

The Indian government is not going to impose any new duties on imports of Chinese solar cells. This is despite the petition by the Indian solar panel manufacturers to give a level playing field. Note Chinese solar panels have virtually destroyed the solar manufacturing industry in the West with big companies falling under the relentless price pressure where solar panel prices have gone down by 60% in one year. Only the Koreans seem to be standing up to the Chinese government backed top tier solar companies from China. The rest have mostly folded up and are facing survival questions including those from Taiwan. Indian solar companies were never that big and cost competitive anyway given the headstart and support of the Chinese backed companies. The price crash in 2011 has seen most of them close their factories as they can’t even cover their costs at the Gross Margin Level.

Indian Solar Panel Companies are asking for protection from cheap imports from China and other countries. Note the prices of solar panels have fallen by 60% in 2011 due to a number of reasons such as cheap raw material polysilicon prices,high competition between majormodule manufacturers, dropping processing costs. The biggest reason for the solar panel price crash has been the support of the Chinese and other Asian government to their respective domestic solar industries.

It is a fact that many of the major solar module companies would be bankrupt right now without government support. LDK is the prime example of a zombie company flourishing on the back of Chinese government support. Indian solar panel makers have got some protection with the federal subsidy policy JNNSM mandating that cell and modules be made in India.However thin film solar panel technlogy is exempt which means that they are not fully protected.Besides state government solar polices don’t protect them at all. The consequence has been that most of the solar panel companies are running at 0 to 20% utilization as orders dry up.

The Indian Solar Companies were hoping that like the US government , India too would impose some sort of anti-dumping duty on imports of Chinese solar cells and panels. But the government seems in no mood to oblige. Note the import duties would hurt the powerful Indian utilities and developers who need the cheap solar panels. There is some protection for the solar players in the federal subsidy scheme JNNSM but nothing for the state subsidy programs. It looks likey that most of the Indian solar cell and panel producers will be wiped out given the current state of affairs.

Read our previous stories on Domestic Content Controversies on Indian Solar Panels.

USA Opposes India’s Solar Energy Domestic Content Requirements

USA has opposed India’s Local Content Requirements for the Federal Solar Energy JNNSM program.Note according to the JNNSM rules,solar panels will have to be produced in India for the first year and solar cells will also have to produced from the second year.There is also a proposal that the local content requirements may be extended beyond 2013 and will also include solar inverters.US administration is opposed to these rules as it will lead to export hurdles for its solar companies Sunpower and First Solar.India installers and developers have also opposed the move as it will lead to lesser choice amongst suppliers and probably higher costs.

Why Germany could join USA, India in Anti Dumping Duty on Chinese Solar Panels Imports

Solar Trade Wars are becoming the norm in the globe these days with the major one between USA and China.The instigator is the German solar company Solarworld which helped started the ITC Case in the USA. India too is thinking of putting some kind of import duty to protect its domestic solar panel producers which are dropping like flies. Chinese solar panel producers have swamped the world with super cheap solar modules. though a part of their low prices can be explained by competitive advantage, another part is due to the labor, capital subsidy given by the Chinese government. It would not take a rocket scientist to say that some of the biggest Chinese solar companies are insolvent and would be dead within a month without Chinese state loans.

The government says it has no objections to Imports of low-priced Chinese solar cells as long as they meet prescribed quality standards. This comes as a setback to domestic manufacturers battling cheaper Chinese imports. Last week, the government rejected a plea of domestic players seeking imposition of import duty on finished solar equipment.

“The market will always bend towards the products which are low-priced. But, yes the quality matters,” said Tarun Kapoor, joint secretary, ministry of new and renewable energy. Kapoor, however, said, “We support what is legal, this is a case and we support WTO-accepted norms. It is not country specific, it’s rule specific.”

India’s National Solar Mission gives preference to domestic manufacturers. However, this is only at the central level and states are not obliged to follow this policy. “There’s only one scheme that offers this provision and it’s not a law,” Kapoor said. “We give the projects to developers who in turn are free to choose the products. If the prices are low and quality is good, then obviously, anyone would go for it.”

Chinese Wind Tower Companies face Dumping Danger after Solar Panel Makers

3 Jan, 2012

China,USA,Wind Energy

Chinese Solar Panel Producers have become a famous target of an anti dumping petition brought on by Solarworld and other companies.Though US Solar Installers have opposed the move as it will increase the solar panel prices in US,ITC has gone ahead with the investigation.Though the charges of subsidies and efficiency can be debated,the fact remains that US Solar Panel Producers can’t compete with Chinese Solar Panels.Massive industrial overcapacity in China has made the prices of products very cheap and made it difficult for Western producers to compete in most areas such as Chemical,Renewable Energy,Textiles etc.The Chinese win because of their low interest rates,cheap labor,free land,massive government support.

Wind Tower makers in the USA are now bringing forth measures to stop Chinese and Vietnamese wind tower producers from selling in the USA as well.With the trade relations between China and USA already quite bad,it remains to get worse still if the wind industry also becomes a focus point.Note Chinese wind turbines producers are already the world’s biggest.The price wars in China have made them look to exports and USA has been targeted by these companies.Sinovel and Goldwind are leading the charge.Its a matter of time before other companies target the wind turbine segment as well.Unlike solar panels ,most wind turbines in USA are made locally.

Read about the pros and cons of wind energy

Local wind tower manufacturers complain about Chinese pricing, sign petition

Claiming unfair pricing practices by Chinese and Vietnamese importers, two wind energy companies with local work sites have signed on to a petition asking trade regulators to investigate possible dumping of wind towers into the U.S. market at less than fair value.The group claims the Chinese government uses subsidies to push wind towers into the U.S. market. The petition asks that duties be placed on Chinese and Vietnamese tower imports by the U.S. Department of Commerce and also seeks an investigation by the International Trade Commission.

Green War between USA and China escalates with acceptance of 301 Filing

The Rise of American Protectionism has its chief enemy in the shape of China.Increasing unemployment and slow economic growth make Currency Wars seem inevitable in the face of shrinking global demand and export loving countries.However Green Wars are something totally new.Clean Technology leadership has been slipping to China,as USA dithers and bickers on climate legislation and energy laws.China has been strategically pumping huge amounts of cash into the new age Green Industries.Other countries like South Korea,Singapore,Malaysia,Japan,Germany,Spain are also making a major push into the Renewable Energy Industry.USA despite its technology leadership has seen Green Jobs melting away towards China and Mexico.With American Public Sentiment turning heavily against China in recent times,the US Congress and Administration have been pressurizing China on multiple fronts

Benefits of Nuclear Energy for World Environment – For and Against

7 Jul, 2011

Nuclear Energy

Nuclear Energy has become a hugely controversial topic after the Fukushima incident in Japan where a nuclear disaster took place because of the earthquake and tsunami.Both the pro and anti nuclear groups have come out with strident arguments for and against nuclear energy.However in some countries like Germany,Switzerland the anti nuclear sentiment has gained so much support that they have decided to permanently end nuclear electricity generation despite the high costs.Before this nuclear based power was gaining ascendancy leading many to call it a nuclear renaissance as countries like China and India made plans to increase their nuclear power plant capacities massively.But the nuclear accident has thrown a spanner in the works with huge protests being seen in India and China despite its authoritarianism also slowing down its nuclear expansion plans.

Why has Nuclear Energy become such a Hot Potato

The Japanese Nuclear Plant Explosions would have sent shivers down the throats of everyone living near Nuclear Plants.Note Japanese Nuclear Plants are thought to be one of the safest just like the French Nuclear Power Stations.However the Earthquake and the subsequent Tsunamis have thrown the Nuclear Plant’s safety features out of gear.The reactors have already shown minor explosions and some radiation leak.While the Nuclear Energy Reactors have not totally melted down and led to a full blown radiation hazard like Chernobyl or even Three Mile Island,the danger remains

World Environment Benefits of Nuclear Energy

Nuclear electricity does not produce any GHG emissions or cause air pollution from the combustion of fossil fuels unlike coal,oil or gas.This makes them very attractive as a source of cheap,non carbon dioxide producing electricity.uclear energy is an emission-free energy source because it does not burn anything to produce electricity. Nuclear power plants produce no gases such as nitrogen oxide or sulfur dioxide that could threaten our atmosphere by causing ground-level ozone formation, smog, and acid rain. nuclear power plants produce a large amount of electricity in a relatively small space, they require significantly less land for operation than all other energy sources

Other Benefits of Nuclear Energy

1) Nuclear Transport - There are a number of transport modes like Ships and Submarines which use Nuclear Based Propulsion.Note for the Military,Nuclear Submarines are of the most lethal weapons capable of staying under water for very long periods which diesel submarines are incapable of.

2) Medical Applications – Nuclear Energy finds wide applications in Medical Science.Use of Nuclear Energy for X-Rays,Chemotherapy Treatments is widely known and accepted.

3) Space and Futuristic Applications – While this technology is still immature and not widely used,Fission Reactors for powering rockets and space vehicles is very useful as the energy generated by small mass is possible which is not possible by chemical energy means.Nuclear Fusion has been said to be the holy grail for generating almost infinite amounts of energy at low cost.R&D continues to be done to develop this and other forms of Nuclear Power like Breeder Reactors etc.

4) Food and Agriculture – Radioisotopes and radiation used in food and agriculture.Sterile Insect Technique (SIT) involves rearing large numbers of insects then irradiating them with gamma radiation before hatching, to sterilize them. The sterile males are then released in large numbers in the infested areas. When they mate with females, no offspring are produced. With repeated releases of sterilized males, the population of the insect pest in a given area is drastically reduced.

Nuclear Electricity Advantages

Reliability - Nuclear Power is a highly reliable form of energy almost as good as other fossil fuel energy forms like coal,gas etc.Nuclear Power Plants except in drastic situations continue to run reliably for the whole day without any changes.
Low Fuel Cost - Large amounts of Nuclear Energy can be produced from the fission on radioactive elements like uranium.The costs of nuclear fuel is relatively very low compared to other energy sources like coal and gas.Also uranium prices currently are quite low making the nuclear electricity price even lower
Low Electricity Cost – The Electricity produced from Nuclear Power is quite low at around 3-5c/Kwh making it very attractive to construct hydro plants.Nuclear Plants also have long lives of between 40-60 years which means that they are extremely profitable once constructed within reasonable costs
High Load Factor - Nuclear Power Plants have very high load factors in excess of 80%.They can generate power almost 24/7 and only require shutdown for periodic maintenance

Against Nuclear Energy

The effects of Nuclear Radiation are quite deadly and widespread even in lower doses or sieverts as was brought to the fore during the Fukushima disaster.It can lead to billions of dollars in lost economic activity.Already 3 major disasters have unfolded in the last 40 years in USA,Russia and Japan despite the safety touted by the Nuclear Industry.

New Nuclear Power Plants face massive delays leading to much higher costs as rule and regulations become tougher.The Nuclear Power Already the nuclear renaissance which was supposed to be boosted by India and China is coming under attack.India’s nuclear power plant to be built at Jaitapur by Areva is seeing massive protests by local villagers as well as intellectuals alike.

Nuclear Waste is already a huge problem which has not been solved by two of the biggest nuclear power countries Japan and USA.Both countries have failed to build nuclear waste recycling facilities despite having thousands of tons these hazardous,deadly waste