China to probe U.S., South Korean solar materials imports

BEIJING/HONG KONG Fri Jul 20, 2012 2:31pm EDT

BEIJING/HONG KONG (Reuters) - China will open investigations into imported U.S. and South Korean solar-grade polysilicon, the country's trade ministry said on Friday, in the latest instance of growing tensions between major solar manufacturers.

The Ministry of Commerce said that it would open anti-dumping and anti-subsidy probes on U.S. imported polysilicon, as well as an anti-dumping probe on South Korean imports of the raw materials used to make solar products.

The Chinese ministry issued the decisions in two statements on its website, citing preliminary evidence from several companies - GCL Poly-Energy Holdings, LDK Solar, and Daqo New Energy.

Chinese officials have threatened to impose trade duties on U.S. shipments of polysilicon if the United States moved to penalize Chinese solar companies.

A spokeswoman for the U.S. Trade Representative's office said the United States was disappointed with the Chinese move and would "vigorously defend its interests" in the case.

"As we have stated with respect to similar actions by China, we are concerned that China appears to have established a practice of using trade remedy investigations to retaliate against legitimate actions taken by its trading partners," USTR spokeswoman Nkenge Harmon said.

Western solar companies have been at odds with their Chinese counterparts for years, alleging they receive lavish credit lines to offer modules at cheaper prices, while European players struggle to refinance.

China's move came a day after Germany's Environment Minister Peter Altmaier gave backing to German companies' efforts to launch anti-dumping proceedings in Europe. Germany is the world's largest solar market.

Earlier this year, the United States put two new import duties totaling about 35 percent on solar equipment from China, citing the country's unfair support of its industry and illegal dumping of inventories in the U.S. market.

The Coalition for American Solar Manufacturing, the U.S. industry group that sought duties on Chinese-made solar panels, blasted the new Chinese investigation as "an abuse of international trade rules."

"Today's announcement by the Chinese government proves once and for all that it is intent on unfairly and illegally allowing its manufacturers to dominate the global solar industry," Gordon Brinser, president of SolarWorld Industries America, said.


China's solar manufacturers such as Suntech Power Holdings, Yingli Green Energy and Canadian Solar have criticized the tariffs set this year as a threat to their young industry that will slow its growth by raising costs.

If punitive tariffs are adopted, it would likely impact importers such as U.S. polysilicon maker Hemlock, the world's largest, and South Korea's largest producer, OCI Corp. U.S.-based MEMC Electronic Materials would also be affected.

Though not in a trade war, China and the United States are vocal in their criticisms over the other's trade policies.

Washington says China's attacks are largely tit-for-tat retaliation for valid U.S. complaints, while China suggests the White House is simply "China-bashing" in an election year.

Beijing on Wednesday also appealed a recent World Trade Organization ruling against Chinese duties on U.S. "grain-oriented electrical steel," a case that the United States says is an example of China using its trade defense laws in a retaliatory fashion.

"The WTO panel in the grain-oriented electrical steel (GOES) dispute upheld U.S. claims that China breached a number of substantive and procedural obligations under the WTO Agreement," Harmon said.

Research firm JI Asia analyst Felix Fok said downstream customers, such as wafer manufacturers, would struggle if China passed on the import tariffs against polysilicon imports.

"China is doing this because some of its companies are basically on their knees," Fok said, referring to more than a year of losses suffered by the sector.

China's solar companies hold more than 60 percent of the global market. The U.S. market alone accounts for about 20 percent of sales of China's largest solar panel manufacturers.

The Coalition for Affordable Solar Energy, a U.S. group that represents solar installers, urged both the United States and China to avoid duties, saying tariffs from either end cost jobs and make solar energy less competitive against fossil fuels.

"Lowering, not artificially raising, the cost of solar should be a global goal," the group's president, Jigar Shah, said in an emailed statement.

(Additional reporting by Christoph Steitz in Frankfurt, Alexandra Hudson in Berlin and Doug Palmer in Washington; Editing by Paul Tait, Michael Perry and Xavier Briand)

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Comments (3)
Kailim wrote:
I don’t quite understand the law concept of the west.

I think Microsoft had been treated unjust and unfairly by courts in the US and Europe. She was fined by virtue of anti-trust law there repeatedly. To me she has become the sort of monopoly through providing the right products at the right time in the right place. She has done nothing wrong except being a successful business entity with vitually no competitors. Yet she had commited a crime and had to pay a fine.

And Chinese are obviously being treated as commiting crime for being competitive and hard working.

I should be grateful if some experts would teach me. I am keen to understand this.

Jul 20, 2012 9:01am EDT  --  Report as abuse
MikeBee wrote:
The last statistic I saw was that the Chinese buy only one dollar of US goods for every four dollars worth of goods they sell to us.

One thing I don’t understand is why American Christian Patriots even buy anything made in China. 1) They hate democracy 2) They love abortion 3) They persecute religions 4) They violate patents and copyrights 5) They pay slave wages 6) They ally themselves with suppressive dictators around the world and 7) their goal is to replace us as the world’s lone superpower.

Jul 20, 2012 7:28pm EDT  --  Report as abuse
zhubajie wrote:
America is a free market. In this free market the 300 million+ consumers vote with their wallet every single day of the week. AND they overwhelmingly vote to buy well priced Made in China. Don’t see that changing for some silly ideological fancies of xenophobics.

Protectionist moves (antidumping duties, etc.) are market distorting, and are paid by AMERICANS. For China the production simply goes to benefit consumers somewhere else in the world. America is just 15% of China’s export market, and it is a market that is not growing anyway. The developing world looks much more promising, especially since China’s technology transfers and capital injections are rapidly raising the living standards so that the natives can afford to buy more.

The only way to stop tit for tat trade action is that the party who started it (America) has to stop. Otherwise it is dollar-for-dollar retaliation, and leaving the resolution to the WTO after years of litigation. China is not Jesus, and does not buy into this offer the other cheek B.S. (you would note that the West only preaches that the OTHER GUY should turn the other cheek, but never itself).

Jul 20, 2012 8:50pm EDT  --  Report as abuse
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