China alert to threat of EU anti-dumping probe

China is keeping a close eye on an anti-dumping complaint that the German solar giant SolarWorld AG filed over Chinese manufacturers' practices and will probably take countermeasures if the European Commission begins investigating the matter, the Ministry of Commerce said on Tuesday.

"The solar industry is of great concern to China," a ministry official who declined to be named told China Daily. "We have paid more attention to this case than any other trade remedy case because of the high value of (the industry's) exports.

"We haven't received any notice from the European Commission yet. But if the commission opens an anti-dumping investigation against Chinese solar makers, China will probably take countermeasures."

The Financial Times has cited an unnamed source as saying that the anti-dumping complaint filed by SolarWorld accuses Chinese manufacturers of selling photovoltaic cells in the European Union below the cost of producing that equipment. The commission, the EU's executive arm, will have 45 days from the date of the case's filing to decide if it will start an investigation.

An industry insider with knowledge of the case told China Daily that the commission has rejected SolarWorld AG's complaints many times.

"The European company's actions are incomprehensible at a time when the EU is contending with a debt crisis," the official said. "China and the EU can indeed cooperate on developing the solar industry."

Experts said the investigation, if opened, will inflict a severe blow to China's solar industry, which has to pay anti-dumping and countervailing duties on exports to the United States.

"If the European Commission accepts SolarWorld AG's complaint, and I foresee a high probability of that happening, that means the commission is ready and is in a position to initiate an anti-dumping probe into Chinese solar cells," said Liu Huijuan, director of the legal department of the China Chamber of Commerce for Import and Export of Machinery of Electronic Products.

"The case will be a very, very important one for China's solar industry, and domestic solar manufacturers will surely defend themselves in the investigation," Liu said.

"We strongly oppose the EU's anti-dumping investigation into the Chinese solar industry. No punitive tariff will be acceptable because the progress of the Chinese solar industry ... has pushed the development of the world solar industry forward.

"We strongly urge the government to take effective measures if the EU decides to overlook the interests of fair trade and to turn to trade protectionism."

A senior employee at TrinaSolar Ltd, a photovoltaic solar company in China, said its officials have been informed of the possibility of an investigation and the company's board on Tuesday discussed ways to respond to the situation. It plans to release an official statement after the EU has taken further official action on the case.

Sang Baichuan, director of the Institute of International Business at the University of International Business and Economics in Beijing, agreed that the commission is likely to accept the complaint, saying that doing so will be seen as a way to protect the interests of European companies.

"They still have a long way to go with various procedures before a final ruling about the investigation can be made," Sang said. "But once these measures are imposed on Chinese solar products exported to the EU, Chinese solar manufacturers will see their market share in the bloc decrease sharply. Some solar companies are even likely to pull out of the EU market."

The EU is by far the world's largest solar market, having 51,000 megawatts of installed solar generating capacity last year, more than 10 times that of the US.

"The EU market was the destination for almost 60 percent of China's solar product exports," said Xu Zheng, head of the Solar Energy Institute at Beijing Jiaotong University. "Once the EU starts anti-dumping or anti-subsidy investigations into Chinese solar products, domestic solar manufacturers will be dealt a series of fatal blows."

The Chinese solar industry's fast development in the past decade has brought domestic producers of such equipment into competition with overseas rivals, Sang said. As a result, trade bodies have begun to misuse remedies intended to prevent unfair trade practices, Sang said.

"Chinese makers of solar products need to explore emerging markets to reduce their exposure to trade investigations in the EU and the US, where the market for such products has shrunk," Sang said.

US solar manufacturers, led by SolarWorld USA, a unit of the German solar giant, accused Chinese companies last year of selling solar panels in the US at prices that were far below what US-made panels could be sold for.

In a preliminary ruling in May, the US Department of Commerce imposed anti-dumping tariffs on solar panels imported from China, setting them at between 31.14 percent and 249.96 percent of the price of those products. Two months before, it had imposed countervailing duties equal to 2.9 percent to 4.73 percent of the price of Chinese panels.