Cloud lifts on solar panels

The deal on the prices for Chinese exports of solar panels that China and the European Union reached over the weekend is welcome as an "amicable solution" to the biggest trade dispute yet between them.

Better still, it sets a cooperative tone for joint efforts to resolve a series of disputes on other products at a time when slow global growth would make a full-scale trade war all too costly.

However, while applauding such pragmatic endeavors to avoid unnecessary trade tensions, it is important to put in perspective the significance of the agreement in view of the development of both sides' low-carbon economies.

For the EU, the agreement will ensure that European users and customers continue to benefit from affordable solar panels.

To defend the EU's long-term reputation as a champion of green growth, the current deal will help relieve European users and customers from the double whammy of higher prices resulting from extremely high tariffs imposed on Chinese solar panels and the shrinking of the subsidies some EU members provide to photovoltaic and related industries.

For China, this green-and-happy solution is of greater significance than saving the country's domestic manufacturers of solar panels from the EU penalty duties that were to enter into force next week.

Admittedly, the settlement to the dispute over exports of Chinese solar panels to the EU, worth 21 billion euros ($27 billion) in 2011, or about 7 percent of the country's total exports to Europe, will definitely buy some time for the domestic industry to reduce its heavy dependence on external demand.

It is believed that a bigger domestic market for solar panels is crucial to both the survival of Chinese PV manufacturers and the acceleration of China's green growth.

The Chinese government has come up with a comprehensive plan to shore up the solar industry, which will help the country embrace low-carbon growth via clean energy. For a start, it has recently raised the target for the country's cumulative PV capacity from 21 million kilowatts to 35 million kW in 2015.

Hence, in retrospect, there is a silver lining to this EU trade cloud, as it might give a much-needed boost to China's transformation from the heavy burning of fossil fuels toward greener and more sustainable development.