China urges prudent EU solar ruling

China called on the European Union to prudently handle the ongoing trade dispute over the nation's exports of solar products, warning that an unfavorable ruling may incur countermeasures from China, a senior commerce official said on Monday.

"If the EU insists on imposing duty orders on Chinese exports and severely hurts the interests of Chinese manufacturers, the Chinese government will not stand by. We have no choice but take any measure to protect the lawful rights of Chinese businesses," said Chong Quan, deputy international trade representative with the Ministry of Commerce.

"Once again, we call on the EU to seriously consider China's suggestions as well as the appeal from enterprises from the EU's upstream and downstream solar industry to cautiously use trade remedy measures. We hope the dispute can be resolved through negotiations," Chong said.

China's exports of solar products dropped 35 percent year-on-year in 2012, with exports of solar panels and modules down by more than 40 percent.

The China-EU solar trade dispute will affect more than 400,000 Chinese workers, and "an improper handling of the case will definitely impact China-EU trade ties severely", said Chong.

Amid challenging trade investigations, Suntech Power Holdings Co, one of the world's leading solar panel manufacturers, was ordered by a court on Wednesday to undergo "bankruptcy reorganization", dimming the prospects for the nation's solar industry.

The EU announced in November that it will investigate alleged government subsidies for Chinese solar panel manufacturers, in addition to an investigation started in September into China's alleged "dumping" of such products in European markets. A preliminary ruling is expected to be issued in early June.

After launching a probe into Chinese exports of solar glass late last month, the latest move in a long-running trade dispute between the EU and China, the bloc ordered its member states on March 5 to register imports of Chinese solar panels and their main components, an administrative step underscoring punitive duties to be applied retroactively if fault is found in the investigations.

The United States imposed anti-dumping tariffs of up to 249.96 percent and countervailing duties of up to 15.97 percent in a final ruling by the US International Trade Commission in November.

Former commerce minister Chen Deming said this month that politicians and entrepreneurs in the EU should handle the solar panel dispute with China properly to avoid greater losses for both sides, and the two sides should boost industrial cooperation as well as seek third-party markets.

A report from the German think-tank Prognos, commissioned by The Alliance for Affordable Solar Energy, a coalition of over 160 companies in the European PV industry, said output of solar products within the EU may increase but total demand would fall owing to the extra cost of solar products, which would hit the wider solar industry as a whole within Europe, as well as other export industries supplying China.

It predicts the loss of between 170,000 and 240,000 jobs within the EU and a total economic loss of between $24 billion and $36 billion over three years. Germany is expected to suffer most, followed by Italy, Spain and the United Kingdom.

Chen added that the current solar trade dispute between China and the EU stemmed from the debt crisis that cut government subsidies to solar energy use in Europe. Meanwhile, Chinese solar panel manufacturers are major importers of solar equipment from both the EU and the US, and the current trade friction also hurts European and US companies.

More than 90 percent of Chinese solar products are exported, with 70 percent shipped to the EU and 10 percent to the US, according to the ministry. The EU remained China's largest trading partner last year despite a 3.7 percent decline in China-EU bilateral trade to $546.04 billion, followed by China-US trade volume of $484.68 billion, according to the General Administration of Customs.

To promote the industry, the State Council announced a series of measures in December to boost the solar industry in China.