Evergreen Solar on China: Cheap Labor & Libor
China’s real advantage lies in the ability of solar panel companies to form partnerships with local governments and then obtain loans at very low interest rates from state-owned banks.
Evergreen borrowed two-thirds of the cost of its Wuhan factory from two Chinese banks, at an interest rate that under certain conditions could go as low as 4.8 percent. Best of all, no principal payments or interest payments will be due until the end of the loan in 2015.
By contrast, a $21 million grant from Massachusetts covered 5 percent of the cost of the Devens factory, and the company had to borrow the rest from banks. Banks in the United States were reluctant to provide the rest of the money even at double-digit interest rates.
