* EU decision follows US duties, although there is no link
* Dumping, subsidy cases likely to be decided at same time
By Philip Blenkinsop and Robin Emmott
BRUSSELS, Nov 8 The European Union launched an
investigation on Thursday into alleged state subsidies for
Chinese solar panel manufacturers, intensifying the conflict
over the multi-billion dollar solar power equipment market that
is straining trade ties.
The EU's executive body is already investigating allegations
of Chinese manufacturers "dumping" solar panels in overseas
markets, meaning deliberately selling products for less abroad
than at home or at less than cost.
It also follows a decision by the United States to impose
duties on solar power products from China, although Brussels
says its decisions are completely separate from Washington's.
"Industries in the United States and Europe are becoming
increasingly aware there is much more evidence of subsidies in
China," said an EU official involved in the investigation. "But
this is not a purely adversarial process. We have said to the
Chinese government that we are open to finding a solution."
The friction comes at a bad time for the economies of both
sides with the EU China's biggest trade partner and China the
EU's second biggest after the United States.
EU Trade Commissioner Karel De Gucht has complained China
subsidises "nearly everything" but also told Reuters last month
that he believed the two sides would avoid a trade war.
The latest subsidy case has been raised following 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.
In a statement on Thursday Prosun said China's state
development bank had given 33 billion euros ($42 billion) in
cheap credit lines to 12 Chinese solar companies since 2010.
The Chinese government did not immediately respond to the EU
decision to go ahead with an investigation but the move comes
within a week of China lodging a complaint with the World Trade
Organisation accusing Italy and Greece of illegally favouring
domestic solar panel producers in promoting new solar power
installations and warning it could put tariffs on EU exports of
the raw material polysilicon.
Chinese companies sold about 21 billion euros ($27 billion)
worth 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 production levels, leading to economies of
scale, rather than any state subsidy.
While it produces quantitities of photovoltaic power
generation modules totalling over 1000 megawatts, many European
manufacturers produce only smaller volumes of several hundred
megawatts, it says.
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, while European solar
companies, including former industry bellwether Q-Cells
, have filed for insolvency.
The United States late on Wednesday gave final approval to
duties on billions of dollars of solar-energy products from
China for five years, which China has protested against.
"The decision has seriously distorted the situation of the
Chinese solar energy industry and the exports of the Chinese
solar energy products to the U.S.," China's Chamber of Commerce
for Import and Export of Machinery and Electronic Products said,
quoted by the official Xinhua news agency.
The European Commission can impose provisional duties within
nine months and the EU has within 13 months of an
investigation's launch to impose definitive duties for up to
Solar panel anti-subsidy and anti-dumping cases against
China are likely to be decided at the same time, within 13
months, unless a compromise is found, the EU official said.