by Nick Pope
Chinese solar manufacturers are building factories in the U.S. to reap American subsidies created by the Inflation Reduction Act (IRA), President Joe Biden’s signature climate bill, according to The Wall Street Journal.
Companies based in China are responsible for about 25% of the 80 gigawatts in new solar manufacturing capacity announced in the U.S. since the IRA became law in August 2022 and established robust tax credit programs to incentivize domestic green energy production, according to the WSJ. Assuming that the factory construction and expected outputs announced by these China-based solar companies stay on schedule, they could reap a combined $1.4 billion worth of value from IRA subsidies each year.
The fact that China-based companies could capture IRA subsidies contradicts one of the key goals of the IRA, which was to serve as a key tool for developing a domestic green energy supply chain, according to the WSJ. The Chinese companies using subsidiaries or partnerships to get in on the IRA subsidies include LONGi and Trina Solar.
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“We definitely don’t want to miss the wave,” Steven Zhu, the president of Trina’s U.S. operations, told the WSJ in reference to the subsidies made available by the IRA.
The supply chains of both Trina Solar and LONGi are reportedly linked to forced labor of Uyghur Muslims in China, according to a 2023 analysis published by Sheffield Hallam University.
China dominates the global supply and refining capacity for the raw materials needed to mass-manufacture green energy-related products, and approximately 80% of the world’s solar panel production happens within China’s borders, according to the WSJ. Even though production costs are still higher in the U.S. with the help of subsidies, some Chinese companies are deciding that it is still worthwhile to set up shop in the American market.
Several of the companies that are anticipating access to IRA tax credits have shifted their production to other Asian countries in the past as American policy and tariffs changed, according to the WSJ. A White House spokesman told the WSJ that the China-based solar companies bringing operations to the U.S. with the IRA’s help mark a reversal in the decades-long trend of American jobs being offshored to China.
The potential for Chinese companies cashing in on IRA subsidies is not confined to solar manufacturing. Gotion, Inc., a subsidiary of the China-based electric vehicle (EV) battery manufacturer Gotion High-Tech, is poised to major subsidized facilities in Illinois and Michigan despite opposition from locals and lawmakers stemming from Gotion High-Tech’s extensive ties to the Chinese Communist Party, which the Daily Caller News Foundation has covered in depth.
The White House did not respond immediately to a request for comment.
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Nick Pope is a reporter at Daily Caller News Foundation.
