Now China to probe U.S. renewable energy support

BEIJING (Reuters) - China on Friday announced an investigation into government policy and subsidy support for renewable energy, weeks after the United States decided to probe sales of Chinese-made solar panels.

The announcement by the Commerce Ministry also comes after China's solar industry association said on Tuesday that Chinese solar companies may ask Beijing to launch an anti-dumping and subsidy probe into imports of U.S. polysilicon, the raw material used to make solar cells.

The tit-for-tat investigations underscore simmering trade tensions between China and the United States, as leaders warn of a rising tide of protectionism amid gloomy global economic tidings.

U.S. vitriol over what it says is China's undervalued currency tops frictions, and U.S. President Barack Obama has taken China to task in recent discussions of trade barriers, having said China is now "grown up" and should act that way in international affairs.

"The Ministry of Commerce has decided to initiate a trade barrier investigation into policy support and subsidies for the U.S. renewable energy sector," a statement on the ministry's website (www.mofcom.gov.cn) said.

It said Chinese companies argued that the U.S. policies "constitute a trade barrier against the export of Chinese renewable energy products to the United States".

The companies complained that U.S. measures "violated the United States' commitments under World Trade Organization rules, and are an unreasonable barrier and restriction on China's renewable energy industry, reducing the competitiveness of Chinese products in the U.S. market".

The investigation would cover programs from the states of Washington, Massachusetts, Ohio, New Jersey and California, the statement said, and include wind energy, solar and hydro technology products.

"During the investigation, the investigating agency may engage in consultations with the U.S. government concerning the measures in question," the ministry said.

An unnamed ministry official said in a separate statement that the ministry would "fairly and objectively evaluate" the U.S. policy and subsidy measures identified by the China Chamber of Commerce for Import and Export of Machinery and Electronic Products and the China New Energy Chamber of Commerce.

The official added that the ministry would consider "initiating the WTO dispute resolution process" if justified.

Earlier this month, the ministry said it was "greatly concerned" about Washington's probe into whether China was selling solar panels in the U.S. at unfair discounts and that its investigation could hurt U.S.-China energy cooperation.

While the U.S. probe threatens to deprive Chinese rivals of a large chunk of the solar market, analysts say U.S. solar firms also risk losing some of the business too if the dispute escalates into a major rift.

"I think this is a political game more than an actual dispute between producers in China and the U.S.," said Keith Li, an analyst at CIMB Research in Hong Kong.

The United States was a significant net exporter of solar products in 2010, including to China, according to U.S. industry group Solar Energy Industries Association. Total U.S. exports of solar energy products were $5.6 billion, with net exports totaling $2 billion.

U.S. imports of solar panels from China rose to $1.5 billion in 2010 from $640 million in 2009.

(Reporting by Michael Martina; Additional reporting by Chris Buckley and Leonora Walet in Hong Kong; Editing by Nick Macfie)