China solar dumping a topic for EU talks?

The European Union's anti-dumping investigation into Chinese solar panels is likely to be included on the agenda during a two-day, China-EU meeting this week.

Chinese Premier Wen Jiabao is scheduled to attend the summit Thursday.

A consortium of some 20 European producers, led by Germany's SolarWorld, which together are responsible for one-quarter of the European Union's manufacture of solar panels, made a formal trade filing against Chinese competitors in July. The EU investigation was launched this month.

German Chancellor Angela Merkel says the anti-dumping issue should be resolved through dialogue.

Whether or not the EU investigation will follow with provisional measures, she said, will be determined in several months.

"That time is available to us for ... namely, a dialogue," Merkel was quoted as saying Monday by China's Xinhua news agency.

"This is not only the hope of Germany but also of the European Commission."

China's solar product exports were valued at $35.8 billion last year, with the European Union's share accounting for 60 percent or $20.4 billion.

The European Commission, in announcing its investigation Sept. 6 said, that in terms of import value affected, it was "the most significant anti-dumping complaint" the commission has received.

The United States has placed tariffs on Chinese solar panel exports following similar complaints.

An editorial Wednesday by Chinese state-run news agency Xinhua urged the European Commission "to be careful about its investigation and avoid rushing to slap tariffs on China's solar panel products, a move likely to set off a trade war which would be no good to either side."

"Punitive tariffs would not only hurt Chinese manufacturers but also trigger a backlash for European companies, which would suffer declining demand for relevant raw materials and equipment worth tens of billions of US dollars from Chinese enterprises," the editorial states.

A significant drop in the cost of raw materials, not government subsidies, is what has driven down the price of China's solar products, the editorial argues.

The editorial says that the price of silicon wafers, a key component of solar cells representing more than 20 percent of solar's total costs, has dropped from $30 to $18 since the beginning of this year.

It also pointed to statistics from the German Center for Solar Research indicating that SolarWorld received about $179 million in support from the German government from 2003-11.

Meantime, Chinese solar companies have started belt-tightening measures.

Suntech Power Holdings Co., the world's largest solar panel maker, said Monday it would temporary shut down one-quarter of its Chinese production capacity, attributing the decision to oversupply as well as preliminary antidumping tariffs in the United States and the European Union's antidumping investigation, The Wall Street Journal reports.