Trade frictions on China's photovoltaic trade and their reshaping effects

Abstract

Nowadays, trade frictions from discriminatory trade policies have significantly affected global trade. As a key renewable energy, solar photovoltaic (PV) trade also suffers from large-scale trade frictions. China, as the largest solar PV manufacturer and exporter, accounts for 80 % of the global supply chain. Under this background, this paper takes China as a case, to assess the impacts of trade frictions on PV trades. First, we try to identify the trade frictions against China's PV products from 2009 to 2023, and analyze the country-specific and type-specific heterogeneity. Second, we apply the gravity model to explore the reshaping effects of trade frictions on China's PV trade, encompassing six types. The results show that the frequency of trade frictions against China's PV products increases and fluctuates from 2009 to 2023, with state aid and subsidies as the major type and world trading powers as the primary initiators. Trade frictions have a considerable dampening effect on China's PV exports. Import controls have a lagged short-to-medium-term effect, export controls have a cumulative but limited effect; trade defense instruments triggers a serious long-term trade dampening effect, but the relevant trade links are being restructured over time. This study has significant theoretical and practical implications, since it not only broadens awareness and focus on trade frictions but also provides a scientific basis for policymakers.