China's solar companies warn of trade war with EU

BEIJING/BRUSSELS Thu Jul 26, 2012 12:58pm EDT

1 of 2. Employees process solar panel components at a solar power plant in Hefei, Anhui province July 26, 2012.

Credit: Reuters/Stringer

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BEIJING/BRUSSELS (Reuters) - China's solar firms warned of a trade war on Thursday, calling on the Chinese government to strike back against an anti-dumping complaint filed by rivals in Europe, but the Europeans said they would not be put off by retaliation threats.

Companies led by Germany's SolarWorld SWVG.DE have asked the European Union to investigate claims that Chinese rivals had been selling their products below market value in Europe.

The European Commission, which has declined to comment on the issue, has 45 days to decide if it will start an investigation.

SolarWorld confirmed on Thursday the submission by the so-called EU ProSun group, which comprises 25 members in Germany, Spain, Italy and other EU countries. German solar module maker Sovello is also part of the initiative.

A similar initiative was spearheaded by SolarWorld in the United States, leading the world's largest economy to impose in May duties of about 31 percent on solar panel imports from China.

"If the EU were to follow the precedent of the U.S. and launch an anti-dumping investigation on Chinese solar products, the Chinese solar industry would suffer a fatal blow," Yingli Solar's (YGE.N) chief strategy officer, Wang Yiyu, said.

"The investigation would also trigger a wholescale trade war between China and the EU, which would cause huge losses to both parties," he said at a briefing by leading Chinese solar companies Yingli, SunTech STP.N, Trina (TSL.N) and Canadian Solar (CSIQ.O).

"We call on the Chinese government to take all necessary and resolute measures to protect the legitimate interests of the Chinese solar industry."

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

German solar company Q-Cells QCEG.UL became the most prominent victim of an increasingly competitive market, filing for insolvency for April. At least three other German solar companies have filed for insolvency in recent months.

EU ProSun, in a visit to meet lawyers handling their case in Brussels, said it would not be deterred by Chinese threats.

"A lot of companies who joined our initiative want to stay anonymous because they fear retaliation, but that is not a reason not to act," said Milan Nitzschke, SolarWorld's vice president who is leading the EU ProSun group.

"It is a reason to act and defend against those threats," he told Reuters.

DIVISION IN EUROPE

But not all European solar companies back the complaint and many say Europe should welcome Chinese imports because they make solar power more affordable.

Close to 60 percent of China's solar exports, worth $35.8 billion, were shipped to the EU in 2011, the four Chinese companies said. Europe accounted for 74 percent of global solar installations in 2011, according to industry association EPIA.

Europeans against SolarWorld's move say the EU ProSun group only represents a fraction of the solar industry.

"The majority of the industry would be the losers of an initiative driven by only a few sector representatives," said Till Richter, managing partner at Germany's Richter Solar.

"The backbone of the solar industry, small and middle-sized local installers, developers, retailers, engineers and maintenance technicians, would be at stake in case of anti-dumping measures being imposed by the EU," Richter said in a statement released by the Alliance for Affordable Solar Energy.

Nitzschke said EU ProSun did not claim to represent the entire European solar industry, but rather those companies willing to go ahead with a complaint.

(Additional reporting by Christoph Steitz in Frankfurt and Robin Emmott in Brussels; Editing by Edwina Gibbs and David Goodman)

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