China-EU trade war looms over solar energy industry

The companies accuse China of giving out “immense subsidies”, Nitzschke said, helping its own industry to gain market share in Europe by selling its products at artificially low prices - a practice known as dumping and illegal under international trade law.

Citing Goldman Sachs, they say China’s share of the EU market for crystalline solar modules has increased from 63 percent in 2009 to 80 percent in 2011. Ten years ago, that number was close to zero.

“China is not competing,” Nitzschke told EUobserver. “It is breaking the rules.”

An eye for an eye

It did not take long before warnings came from the East of swift retaliation.

China’s four major solar panel producers issued a statement denying the allegations and urging the government to take the “necessary measures to protect our ... interests”.

State-run news agency Xinhua, for its part, on Friday (27 July) left little doubt over what those measures may consist of.

It cited Meng Xiangan, a high official charged with renewable energy, as having said that if the EU decides to start investigations, “China will likely initiate anti-dumping and anti-subsidy probes on EU-imported [products]”.

It also cited the country’s ministry of commerce as having said that any “protectionist measures will harm the European solar industry”.

If deemed viable, the complaint may lead to import tariffs on solar panels from China. In May in the US, such action was already taken. In response, China last week launched investigations into possible dumping from the US and South-Korea.

“There is nothing else China can do if the EU follows the precedent of the US and imposes duties on Chinese solar products,” Li Junfeng, another high official, was quoted as having said.

Keeping the lid on

Meanwhile, the European Commission is doing its utmost to keep things quiet.

It now has six weeks to decide on the way forward: to proceed with investigations or not. Until then, it refuses to comment or even to confirm the existence of the complaint.

Yet one spokesperson, Joe Hennon, on Thursday during the executive’s daily press briefing said it had not yet received an official complaint.

His comment was later removed, however, from the commission’s website.

“It was asked for,” said an official from the commission’s audiovisual services who did not want to be named.