* Commission investigation could last up to 15 months
* EU producers complain Chinese selling at below cost
* China expresses "deep regret"
By Philip Blenkinsop
BRUSSELS, Sept 6 The European Commission has
launched an investigation into suspected dumping of solar panels
by Chinese producers, drawing a warning from China that
restrictions on its exports will hurt the multi-billion-dollar
global clean energy sector.
The investigation into the biggest import sector ever
targeted by the Commission stems from a complaint by a group of
European solar companies, led by Germany's SolarWorld.
The group, comprising members in Germany, Italy and several
other EU countries, says Chinese solar firms have been selling
panels below cost in Europe in an effort to gain market share -
a practice known as "dumping".
China's solar firms warned in July of a trade war, calling
on their government to strike back against the impending
investigation. Chinese producers include Yingli Green Energy
, Suntech Power Holdings Co Ltd, Trina Solar Ltd
and Canadian Solar Inc.
The solar panel industry has boomed in the past several
years and become one of the most competitive in the world, with
China exporting more than $25 billion worth of panels to the
European Union in 2011.
China's immediate response to the announcement of an
investigation was more measured, however, and did not mention
any retaliatory steps.
"China expresses deep regret," Ministry of Commerce
spokesman Shen Danyang said in a statement.
"Restricting China's solar panel products will not only hurt
the interests of both Chinese and European industry, it will
also wreck the healthy development of the global solar and clean
energy sector," said Shen.
He urged the European Union to "seriously consider China's
position and proposals, and to resolve friction over solar panel
trade through consultations and cooperation".
The Chinese solar industry expanded rapidly on the back of
profitable exports to Europe and the United States but is now
struggling with severe overcapacity as export markets have
shrivelled and domestic demand remains insufficient.
China sold about 21 billion euros ($26.5 billion) in solar
panels and components to the European Union in 2011 - about 60
percent of all Chinese exports of the product.
The European Union imported goods from China worth a total
of 292 billion euros ($368 billion) last year. Imports of
Chinese products subject to trade defence duties total less than
one percent of that amount.
The United States imposed duties on solar panel imports from
China in May after a similar initiative led by SolarWorld there.
MERKEL IN CHINA
The European Commission will examine whether dumping is
taking place, whether it is damaging EU industry and whether
duties would harm the EU's economic interests.
German Chancellor Angela Merkel, during a visit to China
last week, said she preferred a negotiated settlement to the
dispute. Her comments frustrated Europe's solar panel producers,
who have been pushing hard for the EU to take firm action.
Western solar firms have been at odds with their Chinese
counterparts for years, alleging that they receive lavish credit
lines to offer modules at lower prices.
The German solar company Q-Cells became the most
prominent EU victim of an increasingly competitive market,
filing for insolvency in April. At least two U.S. firms have
also filed for bankruptcy in the past two years in the face of
intense Chinese competition.
However, some European solar companies such as those that
install panels say Europe should welcome Chinese imports because
they make solar power more affordable and are essential for the
27-member bloc to achieve its goal of having 20 percent of
energy from renewables by 2020.
Their alliance, AFASE, called on the Commission to uphold
free trade to secure jobs and support industry growth. It said
there was a warned of the growing danger of a trade war between
Europe and China.
SolarWorld's alliance, EU ProSun, says panel prices dropped
by 75 percent from 2008 to 2011 as the Chinese ramped up
capacity from almost zero in 2004 until it more than covered
global demand for panels last year. It argues prices will still
fall, albeit more steadily, if duties are set.
It says China's only production advantage is the cost of
labour, which typically makes up some 10 percent of the cost of
producing a panel.
"If you don't care about profits you can charge what you
like," EU ProSun President Milan Nitzschke told Reuters. "Maybe
the installers are concerned, but without EU measures we would
see a Chinese monopoly and monopoly prices."
The Commission will send questionnaires to the Chinese
exporters as well as to EU producers and importers and make a
recommendation to EU members. Any duties must be imposed within
15 months of the opening of the investigation and are generally
kept in place for five years.