BRUSSELS Nov 8 The European Union launched an
investigation on Thursday into alleged state subsidies for
Chinese solar panel manufacturers, intensifying a trade war
between the two centred on the multi-billion dollar solar power
The EU's executive body is already studying Chinese
"dumping" of solar panels, or deliberately selling products for
less abroad than at home or at less than cost. It is the largest
import sector it has ever targeted for such investigation.
The latest subsidy case followed a complaint by the EU
ProSun group of 25 European solar panel companies led by
Germany's SolarWorld, the same group that had
complained of dumping.
EU Prosun says subsidies from Beijing made available only to
local firms have stimulated production there to more than 20
times Chinese consumption and close to double global demand, and
averted local bankruptcies.
Over the past week, China has lodged a complaint with the
World Trade Organisation alleging Italy and Greece have
illegally promoted domestic panel producers and warned it could
put tariffs on EU exports of the raw material polysilicon.
The EU is China's biggest trade partner. For the bloc, China
is second only to the United States. However, relations have
been tense, with EU Trade Commissioner Karel De Gucht
complaining China subsidises "nearly everything".
EU ProSun says Chinese solar panel makers have benefited
from very low interest rates thanks to government policy, and if
loans cannot be paid back they might be written off, extended
indefinitely or paid off by government-controlled entities.
Chinese companies sold about 21 billion euros ($26.8
billion) of 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.
Chinese producers include Yingli Green Energy,
Suntech Power Holdings Co Ltd and Trina Solar Ltd
Trina says Chinese solar companies' cost advantages are due
to their high levels of manufacturing leading to economies of
scale, rather than any state subsidy.
While it produces photovoltaic modules at levels of over
1000 MW, many European manufacturers produce only in smaller
levels of several hundred megawatts, it says.
EU ProSun says Chinese producers have reached a market share
of more than 80 percent in Europe with the help of export
subsidies, while a string of European solar companies, including
former bellwether Q-Cells, have filed for insolvency.
Western solar firms have been at odds with their Chinese
counterparts for years, alleging they receive lavish credit
lines to offer modules at cheaper prices.
The EU imported goods from China worth a total of 292
billion euros last year. Imports of Chinese products subject to
trade defence duties total less than one percent of that amount.
The United States late on Wednesday gave final approval to
duties on billions of dollars of solar-energy products from
China for five years.
While anti-dumping investigations and duties are relatively
common, those concerning subsidies are not, because proving a
'financial benefit' from a government or public body can be
harder and because anti-subsidy duties are typically lower.
Politically, subsidies are more sensitive because the
investigation targets a country rather than just its industry.
The EU Commission can impose provisional duties within nine
months. EU member states have within 13 months of the
investigation's launch to impose definitive duties for up to