China launches trade probes on EU solar products

A solar power plant is seen near a thermal power plant in Aksu, Xinjiang Uyghur Autonomous Region May 18, 2012.

BEIJING (Reuters) - China said on Thursday that it would launch anti-dumping and anti-subsidy investigations into imported European Union solar-grade polysilicon, in the latest instance of tit-for-tat trade tensions in the global solar industry.

The move comes as the EU's executive body mulls duties targeting Chinese solar producers, a probe launched in September after companies accused Chinese rivals of "dumping", or deliberately selling products for less abroad than at home.

The Commerce Ministry, in two statements posted to its website, said it would "merge" the EU investigations into ongoing probes of U.S. and South Korean-made solar products "to evaluate the accumulated impact of products from the three regions".

In October, China's largest state-owned utility, the State Grid Corp, said it was working on policies to help ailing solar power producers, including subsidies and easier access to the grid.

China's export-focused solar panel industry has been hit hard by excess manufacturing capacity and waning foreign demand as European nations cut back subsidies for green power.

Companies have slashed prices 30 percent this year as stockpiles grow, virtually erasing the industry's profits.

The Commerce Ministry said the probe was in response to complaints made by several Chinese companies, including Jiangxi LDK PV Silicon Technology Co., a subsidiary of LDK Solar., one of China's hardest hit solar manufacturers.

Major producers, including Suntech Power Holdings and Trina Solar, are turning to the domestic market, now one of the world's biggest, for solar energy development.

Western solar firms have been at odds with their Chinese counterparts for years, alleging they receive lavish credit lines to offer modules at cheaper pricing.

EU solar firms have said Chinese solar panel makers benefited from low interest rates thanks to government policy, and if loans could not be paid back they might be written off, extended indefinitely or paid off by government-controlled entities.

The United States leveled steep final duties on Chinese-made solar products in October, a move Beijing warned would provoke greater trade frictions in the new energy sector.

Chinese companies sold about 21 billion euros ($27.1 billion) in solar panels and components to the EU in 2011 - about 60 percent of all Chinese exports of the products and some 7 percent of all Chinese exports to the EU.

Europe is the top market for solar products, accounting for 74 percent of global installations in 2011, according to industry association EPIA.

(Reporting by Michael Martina and Hui Li; Editing by Ron Popeski)