Trade war: Chinese solar panels vs EU wine

Business Week and many other news outlets tell us about another worrisome development in a possibly looming trade war between the EU and China (or EU and the rest of the world).

Some EU apparatchiks have decided that China is selling solar panels below cost so they imposed 11.8% tariffs on them – but this fee is meant to grow to 67.9% within two months. Holy cow. China is clearly going to revenge. At this point, they are preparing actions against the European wine. The French who believe that they produce some of the best wines in the world aren't happy but it's their own fault, to a very large extent. And of course that the Chinese investigation of possible subsidies for the European agricultural products should naturally end up with the "guilty" verdict: the European agriculture is subsidized and manipulated with from A to Z. Needless to say, the wines were only picked for symbolic reasons; things would become tougher if China began to target Airbus aircraft, for example.

It's truly concerning to see that among the Chinese communists and the European Union officials, it's the latter who are much more fanatical, unhinged anti-market Mujahideen who don't hesitate to put our continent's and the world economy's health (and perhaps the global peace) at risk whenever they decide to pursue their sick anti-market policies. China says that now, during these trade conflicts, Europe must recognize its decline. It may sound tough but I completely agree with that. If Europe is becoming uncompetitive etc., and there are probably good reasons for that (to a large extent, it's someone's fault, the fault of some very bad policies), it is just completely wrong to try to mask this fact by spitting on others.

The EU "leaders" have already distorted the market conditions so brutally that it may be hard to decide what is actually "normal" and "fair" in the business relationships between Europe and the rest of the world. Incidentally, India and others are still not paying the ransom that the EU imposed upon the foreign airlines operating in Europe and India and probably others are readying reprisals. Not too good.




But let's return to the topic of the tariffs for solar panels.

First, under normal market conditions, there should be no tariffs. If China is helping its products by dumping prices, it's good for the consumers – most of us. Every company – and China is a very large company if you view it in the right way (and some communist policies are its inner issue – every company has the right to organize itself in a way it prefers) – has the right to run campaigns and offer discounts in order to promote its products. It's a completely normal part of the competition. Such a dumping isn't for free; it costs something. The possible benefits include an advantage over competition (especially if the competition can't afford to generate losses or debt, not even temporarily) but this outcome isn't guaranteed. It makes no sense to regulate such things. Dumping and similar things help the consumers to test products they wouldn't otherwise try – and all these things help to make the markets more efficient and consumers more satisfied.

We may find it problematic if a very large "company" such as China, with giant cash reserves, is using dumping prices to prevail in the long run. But whether you like it or not, this extra power does come with the cash reserves. The Chinese have behaved more responsibly in fiscal matters and their greater ability to test the resilience of their competition by dumping prices is one of the prizes you win if you manage to produce savings instead of debt. The converse holds for Europe and its debt-creating policies, of course. So don't whine about it, EU commies and populists: this comparative disadvantage of Europe is your fault.



The tariffs on solar panels are even more insane if you realize that the EU apparatchiks have claimed that "renewable" energy sources were a good thing; they even introduced a huge system of subsidies for these economically unfeasible energy sources themselves. If they were a good thing, they should enthusiastically thank China for sending us solar panels – especially cheap enough solar panels. But quite suddenly, the desire of these officials to irrationally promote excessively expensive "renewable" energy sources is beaten by another hardwired far left-wing instinct, protectionism, and this explosive mixture can't lead to anything good.




China has the unquestionable right to revenge for the disgusting, anti-market harassment launched by the EU officials and start to harass exporters who are sending stuff to China by comparable policies. Europe is the side that started these annoying steps; the EU is the Adolf Hitler of this new war if one is getting started. But do we really want such a thing? Do we want to lose the right to buy cheap foreign products? Do we want our producers to lose the option to export their products to whole and very important parts of the world or to any foreign country?

Do we understand and do the EU apparatchiks understand what this kind of protectionism does to the continental and world economy?

In Europe, the market for many things has been distorted by many illogical and pathological interventions so that sometimes you no longer know what is the actual price of many things. (These things – multiple prices that have nothing to do with each other – are even worse in countries like Argentina, a Latin American visitor recently assured me.) Some imported products are twisted by heavy tariffs. Some products are made cheaper if they agree with some pseudoscientific, ideologically driven criteria of "fighting against the global warming". Others have already been made more expensive with the same excuse, because their production or consumption "contributes to the global warming".

Couldn't we just eliminate all this mess? All this stuff is a road to hell. Every billion dollar that you redirect using these ad hoc regulations is potentially a billion that has been stolen or used for criminal activity according to someone else. You just shouldn't behave that these things can be done routinely.

A trade war may start because of any product but it's no coincidence that products whose prices have been manipulated with – using tariffs, carbon taxes, carbon credits, and similar things – are the most likely products to lead to a trade war because people (and nations) simply can't possibly agree about the right extent to which the prices should be manipulated, subsidized, increased by tariffs and carbon taxes, and so on. And even the same people – in this case the shameful EU apparatchiks – aren't ethical enough to stay consistent in their principles, in their methods to manipulate all these prices, as their sudden opposition to cheap solar panels proves.

Let me tell you once again what is the right extent to which prices or air tickets, solar panels, and hundreds of similar products and services should be manipulated with by tariffs, carbon fees, carbon taxes, carbon credits, and similar fudge factors. The right extent is zero. Everything else is a crime and if the ongoing row will result in a full-fledged trade war with China (or a greater bloc of countries), all the EU apparatchiks and global warming alarmists and protectionists and similar left-wing garbage people deserve a heavy punishment, at least a life in prison. The Old Continent can't afford to let such people escape unpunished.

And that's the memo.