August 15, 2014 / 1:00 AM / 5 years ago

China to suspend imports of processed polysilicon

SHANGHAI, Aug 15 (Reuters) - China’s Ministry of Commerce and General Administration of Customs have announced they will halt imports of processed polysilicon, marking an intensification of an ongoing trade battle between China and trading partners over solar power exports.

The statement, posted on the website of the Ministry of Commerce, said the new policy will come into effect on Sept. 1, and is being implemented in reaction to surging imports from South Korea, the U.S. and Europe.

Polysilicon is a material used in making solar panels.

China imposed anti-dumping and anti-subsidy duties on imports of polysilicon from the European Union in April, having already imposed similar duties on South Korean and U.S. makers, seen as retaliation against anti-dumping measures enacted in the U.S. and Europe against Chinese solar power manufacturers, accused of dumping panels at below cost overseas.

The move, in the context of other signs of government support for the industry, may provide some relief to struggling Chinese solar power component manufacturers and polysilicon processors.

China continues to struggle to digest overcapacity and bad debt in its solar power industry, which returned to net profitability in 2013 after years of losses. Policies intended to develop China’s renewable energy industry as a global champion after the global financial crisis also over-stimulated market entry and excessive bank borrowing.

Another problem has been the overdependence Chinese companies have had on overseas export markets. Chinese exports surged when foreign governments, in particular in Europe, were heavily subsidizing solar power installations, but when the subsidies wound down and foreign governments began dumping investigations on Chinese producers, demand flagged.

Reporting by Pete Sweeney

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