**Abstract**
China's processing trade has seen a sharp rise in polysilicon imports, with a so-called "explosion table" reported from January to May. The United States, in particular, has avoided anti-dumping duties amounting to over 570 million yuan. In May alone, China imported an unprecedented 5,868 tons of polysilicon through processing trade, making up 84.4% of the total import volume. Industry experts are now calling for the prohibition of polysilicon imports via processing trade, as this method has become a major channel for evading tariffs.
The growing trend of using processing and entrepot trade to smuggle solar-grade polysilicon into China has raised concerns among regulators. This practice allows foreign producers to bypass tariffs and anti-dumping duties with little fear of consequences. According to recent customs data, China imported 6,949 tons of polysilicon in May 2014, with 5,868 tons coming through processing trade—nearly 84.4% of the total. Additionally, 885 tons of polysilicon re-exported from Taiwan through Chinese processing trade also hit a record high, accounting for 12.7% of the total.
Industry analysts have pointed out that China’s trade remedies against U.S. and South Korean polysilicon imports have largely failed to curb the surge in imports. Despite the imposition of anti-dumping duties ranging from 53.3% to 57% on U.S. polysilicon and 2.3% to 48.7% on South Korean polysilicon, the actual impact has been minimal. The main reason lies in the use of processing trade, which allows companies to avoid tariffs altogether.
In response, the U.S. has started imposing deposit rates equivalent to preliminary ruling levels on Chinese photovoltaic products exported to the U.S., ranging from 18.56% to 35.21%. These measures apply regardless of whether the components are made domestically or sourced from third countries. Industry insiders confirm that these new rules are designed to prevent Chinese companies from circumventing trade barriers through indirect means.
The U.S. is not only targeting direct exports but also trying to block “backdoor†routes such as using Taiwanese batteries or components to manufacture and export PV modules. As the U.S. prepares to announce its final results of the anti-dumping investigation by December 11, the pressure on Chinese manufacturers is expected to grow.
Despite the implementation of anti-dumping measures, domestic polysilicon companies continue to struggle. According to a report by the China Nonferrous Metals Association, many enterprises are still operating at low capacity, with second-tier firms running at just 54% of their potential. Only a few top-tier companies have managed to turn a profit, highlighting the ongoing challenges faced by the industry.
Experts suggest that including polysilicon in the list of prohibited items under processing trade could significantly reduce tax evasion and help stabilize the domestic market. Lin Ruhai, vice president of the China Nonferrous Metals Association Silicon Branch, emphasized that this move could save billions in investment and support the long-term development of the industry.
While the ban may affect some specific PV companies, it is unlikely to have a major impact on the broader market. Most long-term contracts involve small volumes, and the remaining term of these agreements is limited. Therefore, the transition to domestic polysilicon would be manageable.
Overall, the inclusion of polysilicon in the processing trade ban is a necessary step to combat dumping and protect the domestic industry. It will not only help curb unfair trade practices but also promote sustainable growth in the renewable energy sector.
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