When it comes to ensuring a clean energy future for the United States, the Inflation Reduction Act was supposed to be a game-changer—a way to bolster the domestic supply chain and rapidly boost US manufacturing in renewable energy, while reducing dependence on China. But as a new report from the consulting firm Horizon Advisory reveals, the exact opposite is happening. China’s state-backed solar industry, bolstered by massive government subsidies, is exploiting loopholes in US policy and using taxpayer-funded IRA tax credits to expand its dominance over the global solar market, including in the United States.
Horizon’s report exposes the stark reality: Chinese solar firms are using the IRA’s 45X tax credits, designed to increase US domestic manufacturing, to set up assembly plants on American soil. This move allows them to access $125 billion in federal tax credits, while retaining control over the higher-value segments of the supply chain back in the People’s Republic. In essence, US taxpayers are funding the expansion of Chinese companies that are directly competing with American businesses—businesses that have invested billions to create jobs and build solar manufacturing capacity in the United States.
China’s stranglehold on the solar supply chain isn’t new, but it is becoming more entrenched thanks to this policy shortcoming. China’s solar industry has long benefited from enormous subsidies from Beijing, allowing it to produce solar components at artificially low prices and dump overcapacity into global markets. The goal is clear: to dominate the renewable-energy industry just as the Middle Kingdom has done with other critical sectors. The Horizon Advisory report is only further evidence how Chinese firms are using US tax credits to further that agenda, threatening the viability of American manufacturers.
Worse, Congress recently missed a key opportunity to address the issue. During “China Week,” House Speaker Mike Johnson and the Republican leadership failed to advance any meaningful legislation that would prevent Chinese firms from continuing to exploit US tax credits. The irony is glaring: The IRA was supposed to bolster American-made renewable energy, but instead, it is giving China an even greater advantage in the market.
Adding insult to injury, the Solar Energy Industries Association—a solar lobby deeply connected to Chinese companies—has been pushing hard to keep these loopholes open. As Horizon Advisory report details, the SEIA has been consistently undermining US manufacturers, while advancing policies that benefit Beijing.
SEIA was recently exposed for deploying a “multimillion-dollar lobbying and public relations campaign to keep the cheap Chinese imports coming,” as The Guardian put it. The SEIA’s lobbying led to the imposition of a solar tariff moratorium that allowed Chinese firms to circumvent US trade laws, further solidifying their dominance, despite a Department of Commerce investigation that found that China was guilty of illegal trade activity. Another report found that the SEIA failed to disclose its leading members, including Chinese-owned companies implicated in illegal tariff evasion and the use of slave labor, and that the SEIA’s “main strategy for the past 10 years has been to lament restrictions on Chinese solar production.”
“This situation underscores the pressing need for immediate action from Congress.”
The damage is already visible. Last month, Meyer Burger, a Swiss company that had planned to open a solar-cell production plant in Colorado, canceled its project, citing financial unviability. It is no coincidence that this decision came after China flooded the market with cheap solar products—enabled by poor US policy decisions.
This situation underscores the pressing need for immediate action from Congress. Several lawmakers have recognized the problem. Bipartisan legislation introduced by Sens. Sherrod Brown, Bill Cassidy, Jon Ossoff, and Rick Scott would prohibit Chinese firms from accessing IRA tax credits. Similar legislation introduced by Sen. Marco Rubio (a Compact contributor) and Rep. Carol Miller would do the same. These bills are a crucial first step toward closing the loopholes that allow China to exploit US taxpayers and undermine our solar industry. If lawmakers don’t act, the future of solar manufacturing—and the well-paying jobs of the industry—will belong to China.