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Cover Story Series> Business
UPDATED: June 24, 2013 NO. 26 JUNE 27, 2013
Cooperation Brings Mutual Benefit

The European Commission's decision to slap tariffs on Chinese solar panels has met strong opposition and caused much dispute. Alongside a weak economic recovery, it might be more wise for the EU to seek cooperation and common development with China rather than provoke a trade war for partial interests.

China and the EU are important trading partners and have enjoyed an increasingly thriving relationship in recent years. The latter is China's biggest trade partner and top import source while the former is Europe's second biggest trade associate and third largest export haven. In 2012, both sides hit over $546 billion in trade. Despite positive developments, bilateral trade disputes remain, which can only be solved via negotiations.

At present, solar panel producers in the EU face serious problems. Prior to the global financial crisis, the EU had issued a development plan on renewable energy sources, taking steps to push for the transformation of the energy industry via subsidies, amongst others. However, support has dwindled in recent years, resulting in decreasing market demand, as well as the decline or bankruptcy of some photovoltaic enterprises.

On the other hand, Chinese photovoltaic enterprises have always prioritized technological innovation and large-scale production, constantly reducing costs, which is the major factor behind the competitive edge of Chinese solar panels. However, the EU, citing India in its investigations, has ignored the resilience of Chinese made products. In fact, production costs of solar panels in India are much higher than in China, while few can rival the scale of industry within the latter.

In the global solar panel scheme, China is at an advantage in the production of battery components and panels, while the EU takes the leading role in research and development, raw materials and equipment manufacture. Their respective strong points are revealed in product prices. This is the result of economic globalization and international industrial specialization, as well as comparative advantages and free competition.

China has shown sincerity and a constructive stance in the trade dispute. Likewise, the EU should in turn be sincere in its efforts to reach a settlement that satisfies both parties. What we need is cooperation rather than confrontation.

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