China warns EU over solar spat

China continues to hold out hope that an amicable solution will be found through diplomatic channels to the EU-China solar trade spat. But if it is not, Beijing will take stern action, warns a senior Chinese trade official.

In the clearest language on the issue since China’s recent leadership transition, Chong Quan, deputy international trade representative, noted that the Chinese solar sector was “strongly urging the government to take counter-measures” in the event that the EU imposes anti-dumping and countervailing tariffs on Chinese PV kit.

Such a ruling would have a “seriously negative impact” on broader trade relations between the EU and China, Quan claims, flagging up industries such as automobiles, aircraft and agriculture as being key to trade between the two blocs.

“If the EU stubbornly insists on handicapping [Chinese product], serious damage to the interests of Chinese companies, the Chinese government will not stand idly by,” he says.

Despite the tough language, however, Chong insisted that China would “exercise restraint” even in the event of an adverse ruling in Brussels, and “has no intention of starting a trade war”. If the European Commission decides against Chinese companies, the issue would likely be referred to the World Trade Organization, he says.

In his remarks – apparently made to a journalist in China before being republished on the Ministry of Commerce’s website – Chong seized on internal EU divisions on the issue, referring to German Chancellor Angela Merkel’s stated opposition to any tariffs.

Despite the bankruptcy of a number of high-profile German solar companies in recent years – as well as the decision of others, such as Bosch, to leave the industry – export-driven Germany is seen as having more to lose than gain from a trade war.

Chong rejected the notion that Beijing’s leadership transition has in any way complicated the situation or shut down dialogue between China and the EU, saying: “Communication channels between the two sides at all levels remain unblocked, and China has never interrupted or delayed consultations for any reason.”

He also underscored the notion – trumpeted by certain elements of the European solar industry – that China and the EU need other each to make PV a competitive source of energy.

He noted their different “comparative advantages”, with China dominating the mass production of modules while European companies like Wacker Chemie continue to excel at polysilicon, and players like Meyer Burger at production-equipment machines.

Last September the Commission opened an investigation into alleged dumping of Chinese PV kit on the European market, and two months later began looking at allegations of illegal subsidies for Chinese companies at home. A preliminary ruling may come as early as June.

Earlier this month the Commission ordered European member states to begin registering imports of Chinese modules, which would allow duties to be applied retroactively.