* Western and Chinese solar companies at odds for years
* U.S. solar panel companies call it trade retaliation
* Earlier this year, U.S. set import duties on Chinese solar
By Michael Martina and Leonora Walet
BEIJING/HONG KONG, July 20 China will open
investigations into imported U.S. and South Korean solar-grade
polysilicon, the country's trade ministry said on Friday, in the
latest instance of growing tensions between major solar
The Ministry of Commerce said that it would open
anti-dumping and anti-subsidy probes on U.S. imported
polysilicon, as well as an anti-dumping probe on South Korean
imports of the raw materials used to make solar products.
The Chinese ministry issued the decisions in two statements
on its website, citing preliminary evidence from several
companies - GCL Poly-Energy Holdings, LDK Solar
, and Daqo New Energy.
Chinese officials have threatened to impose trade duties on
U.S. shipments of polysilicon if the United States moved to
penalize Chinese solar companies.
A spokeswoman for the U.S. Trade Representative's office
said the United States was disappointed with the Chinese move
and would "vigorously defend its interests" in the case.
"As we have stated with respect to similar actions by China,
we are concerned that China appears to have established a
practice of using trade remedy investigations to retaliate
against legitimate actions taken by its trading partners," USTR
spokeswoman Nkenge Harmon said.
Western solar companies have been at odds with their Chinese
counterparts for years, alleging they receive lavish credit
lines to offer modules at cheaper prices, while European players
struggle to refinance.
China's move came a day after Germany's Environment Minister
Peter Altmaier gave backing to German companies' efforts to
launch anti-dumping proceedings in Europe. Germany is the
world's largest solar market.
Earlier this year, the United States put two new import
duties totaling about 35 percent on solar equipment from China,
citing the country's unfair support of its industry and illegal
dumping of inventories in the U.S. market.
The Coalition for American Solar Manufacturing, the U.S.
industry group that sought duties on Chinese-made solar panels,
blasted the new Chinese investigation as "an abuse of
international trade rules."
"Today's announcement by the Chinese government proves once
and for all that it is intent on unfairly and illegally allowing
its manufacturers to dominate the global solar industry," Gordon
Brinser, president of SolarWorld Industries America,
China's solar manufacturers such as Suntech Power Holdings
, Yingli Green Energy and Canadian Solar
have criticized the tariffs set this year as a threat to their
young industry that will slow its growth by raising costs.
If punitive tariffs are adopted, it would likely impact
importers such as U.S. polysilicon maker Hemlock, the world's
largest, and South Korea's largest producer, OCI Corp.
U.S.-based MEMC Electronic Materials would also be affected.
Though not in a trade war, China and the United States are
vocal in their criticisms over the other's trade policies.
Washington says China's attacks are largely tit-for-tat
retaliation for valid U.S. complaints, while China suggests the
White House is simply "China-bashing" in an election year.
Beijing on Wednesday also appealed a recent World Trade
Organization ruling against Chinese duties on U.S.
"grain-oriented electrical steel," a case that the United States
says is an example of China using its trade defense laws in a
"The WTO panel in the grain-oriented electrical steel (GOES)
dispute upheld U.S. claims that China breached a number of
substantive and procedural obligations under the WTO Agreement,"
Research firm JI Asia analyst Felix Fok said downstream
customers, such as wafer manufacturers, would struggle if China
passed on the import tariffs against polysilicon imports.
"China is doing this because some of its companies are
basically on their knees," Fok said, referring to more than a
year of losses suffered by the sector.
China's solar companies hold more than 60 percent of the
global market. The U.S. market alone accounts for about 20
percent of sales of China's largest solar panel manufacturers.
The Coalition for Affordable Solar Energy, a U.S. group that
represents solar installers, urged both the United States and
China to avoid duties, saying tariffs from either end cost jobs
and make solar energy less competitive against fossil fuels.
"Lowering, not artificially raising, the cost of solar
should be a global goal," the group's president, Jigar Shah,
said in an emailed statement.