China says U.S. solar ruling smacks of protectionism

China rejected a preliminary ruling by a U.S. trade panel that imports of Chinese solar panels are harming the domestic industry, saying the decision shows the country's "inclination to trade protectionism."

The U.S. International Trade Commission on Dec. 2 took the first step toward imposing added tariffs on Chinese solar imports, voting unanimously in Washington on a petition by Bonn- based SolarWorld AG (SWV) that called for antidumping and countervailing duties. The commission will now hold a full investigation.

Such protectionism measures would hurt bilateral trade and jeopardise mutual cooperation on new energy issues, the Ministry of Commerce said on its website on December 3.

The Ministry of Commerce said the decision was made without sufficient evidence showing the US industry had been harmed and did not take into account Chinese companies' arguments or opposition from US industries and other affected groups.

"China is deeply concerned about the decision, which does not tally with facts and highlights the United States' strong tendency for trade protectionism," it said.

The commerce ministry said in the statement that China hopes the US will objectively analyze why some US solar panel companies lack competitiveness.

"The United States should avoid abusing trade remedies which will affect bilateral trade and mutually beneficial cooperation between China and US enterprises in the new energy sector," it said.

SolarWorld AG, along with six other U.S. solar panel manufacturers, filed a petition with the U.S. Department of Commerce and the International Trade Commission alleging that Chinese companies have been dumping products on the U.S. market at prices below the cost of production. The companies also accuse the Chinese government of providing illegal subsidies, cash grants and tax breaks to its solar-power manufacturing industry, thereby injuring U.S. manufacturers. The proposed punishment is duties of more than 100 percent on the price of imported solar panels from China.

Twelve of fifteen Chinese photovoltaic firms that have released financial statements reported net losses in the third quarter of this year, Beijing Business Today reported on November 25.

Average profits at the fifteen photovoltaic firms shrunk 220.28 percent year on year. The decline in profits of Chinese solar firms has been attributed to a slowdown in demand from the European market.