China Retaliates with Anti-dumping Action on US Polysilicon

China has launched an anti-dumping investigation into American exports of a key solar panel ingredient, a move that raises the stakes in the escalating US-China trade dispute.

Earlier this year, the US slapped anti-dumping duties of more than 35 per cent on imports of Chinese solar panels, a ruling that was decried by Chinese producers.

In what industry insiders said was a retaliatory step, China's Ministry of Commerce announced on Friday, 20 July that it will investigate anti-dumping penalties for exports of solar-grade polysilicon, a key ingredient in solar panels, from the US and South Korea. A ruling is expected by July 20, 2013, the statement said.

Beijing is not unique in its decision to focus on clean energy in a trade investigation. Such disputes in the sector appear to be on the rise, partly because of a global slowdown in installations of wind turbines and solar panels that has left many manufacturers struggling. Share prices of the world's largest wind and solar companies have tumbled over the past 12 months.

China is the biggest global producer of solar panels, accounting for close to half of worldwide production. Much of the polysilicon used in Chinese panels is imported from abroad.

Dow Corning, a US company that is among the world's largest producers of polysilicon, expressed dismay over the Chinese anti-dumping investigation on Friday. Chief executive Robert Hansen said that the Chinese investigation would impact the company's ability to sell material to China – which is the biggest market for Dow Corning's polysilicon subsidiary, Hemlock Semiconductor.

Mr Hansen said that China's trade investigation is part of a "broader trade conflict extending far beyond the polysilicon and solar industries, as an escalating number of trade disputes have been initiated throughout the globe in the past 12 months ... No country or industry wins when trade disputes escalate." He added that the dispute could lead to higher solar panel costs and threaten more than $1bn of US solar sector exports.

Solar executives in Beijing said the polysilicon probe is a direct response to US tariffs on Chinese panels.

Shi Dinghuan, head of the China Renewable Energy Society, an industry lobby group, said: "The US started a trade war with China, and this unreasonable action violates World Trade Organisation principles. China will take necessary measures out of self-defence."

Mr Shi added that the trade dispute would impede global progress on environmental causes. "This trade war is at odds with our shared goals on climate change," he lamented. "But we have no choice."

The US anti-dumping investigation of Chinese panels was launched by Washington last November, after the high-profile bankruptcy of a government-supported solar company, Solyndra.