US ruling ignites fresh solar row

Storehouse of a solar product producer in Shandong province. Top Chinese officials were extremely "dissatisfied" with the US decision to apply preliminary duties of between 18.56 percent and 35.21 percent on Chinese solar products imports. Dong Naide / For China Daily

Higher duties may prompt Chinese firms to exit market

The US decision to impose fresh tariffs on solar imports from China will further escalate the trade friction between the two countries and prompt Chinese solar firms to exit the US market altogether, industry sources said on Wednesday.

Top government officials said they were extremely "dissatisfied" with the US decision to apply preliminary duties of between 18.56 percent and 35.21 percent on Chinese solar products imports.

The US Commerce Department on Tuesday said it was imposing the preliminary duties on Chinese solar panel products as it felt that Chinese manufacturers had benefited from unfair subsidies. It said its actions followed a new round of anti-subsidy and anti-dumping investigation into Chinese solar products started earlier this year.

The move is meant to "close a loophole" allegedly used by Chinese manufacturers since 2012, when Washington imposed tariffs on solar cells made in the Chinese mainland, the basic building blocks of a solar panel. Chinese mainland companies have been able to avoid paying duties by assembling panels with cells made in offshore locations like Taiwan.

However, most of the Chinese solar firms do not accept the charges of "unfair subsidy" or "dumping products below cost". Instead, they interpret the move as pure trade protectionism.

"The statement about how to define the origin of solar panels is quite blurred in this ruling. In fact, it contradicts the rule the US had used in the last round of investigations," said Chen Huiqing, director of the legal department at the China Chamber of Commerce for Import and Export of Machinery and Electronic products.

The Ministry of Commerce said the US has ignored facts and legal grounds, and applied conflicting rules to restrict Chinese products. It is an abuse of trade agreements, and is obviously angled at trade protection, which will definitely have a negative impact on the trade disputes between the two countries, said the statement published by the ministry on Wednesday.

"The US cannot solve the problems of its solar companies simply by adopting trade remedy measures. China wants the US to cautiously handle the investigation and terminate it as soon as possible. China will closely watch the case, and reserve the right to protect its own legitimate rights and interests," said the statement.

The Chinese government had decided to impose tariffs in January on US and South Korean polysilicon - the base ingredient for making conventional photovoltaic solar cells.

Chen said the CCCME is actively organizing enterprises to defend themselves. However, once the US decides to add new tariffs and the duty rates are set high, Chinese companies will be forced to leave the US market, she said.

"Currently, Chinese companies account for over 50 percent of the US solar market, a much higher proportion than in 2012. However, if the final rulings turn negative and Chinese companies are forced to pay higher duties, then they will have no choice but to leave the US market," she said.

"Many Chinese solar companies are passing through a rough period. The US decision will definitely create big problems for Chinese companies," said Shawn Qu, CEO of the Nasdaq-listed Canadian Solar based in East China's Jiangsu province.

The flip side of the ruling is that it will also escalate the prices of solar products in the US markets. Large-scale solar plants will diminish, and the market will shrink to half of its current size, Qu said.

The anti-subsidy duties would be imposed after the Commerce Department and the US International Trade Commission make affirmative final rulings. Meanwhile, a preliminary decision on the anti-dumping section is due by July 25.

"The installed cost of PV solar products has dropped by about 75 percent in the last five years, driven largely by the falling price of solar cells as a result of major increases worldwide in polysilicon manufacturing capacity and in Chinese cell and module manufacturing capacity. If this trade dispute is not settled soon, both sides will lose out," said Tony Clifford, CEO of the US-based Standard Solar.