Ministry of Commerce to determine if retroactive duties should be levied

China launched an investigation on Monday to determine whether retroactive duties should be levied on imported solar-grade polysilicon from the United States, South Korea and the European Union.

One analyst described the decision as signifying an intensifying trade war in the solar industry.

The investigation comes after complaints lodged by domestic producers of solar-grade polysilicon.

The Ministry of Commerce is also to determine whether to levy anti-subsidy duties retroactively on the material from the US and the EU, according to a statement on its website.

Solar-grade polysilicon is the main ingredient for solar panels and modules. The ministry launched a trade investigation in July into solar-grade polysilicon from the US and South Korea, two of the world's biggest producers, after the US levied stiff anti-dumping tariffs and countervailing duties earlier this year on solar cells made in China.

The EU followed suit by launching the bloc's biggest anti-dumping investigation in September into solar panels from China. This, in turn, prompted the Ministry of Commerce to start an investigation into EU-made solar-grade polysilicon in November.

Zhou Shijian, a senior trade expert at Tsinghua University, said: "China is not willingly making the move, but it's the only countermeasure that the Chinese government can take when the US insists on the hefty tariffs, and when negotiations with the EU did not solve the dispute.

"The final result will not benefit either side as the entire global solar industry will be badly hurt amid an escalating trade war. But China's move will probably force the EU to turn to negotiations for resolving the dispute," he added.

Zhou said one way out of solar disputes between China and the West is to exploit China's domestic market, as 90 percent of the country's solar-grade polysilicon is imported and 90 percent of the finished products are exported, with the EU and the US the biggest export destinations.

The Ministry of Commerce said a ruling on retroactive duties will be announced along with preliminary and final findings of anti-dumping and countervailing investigations into polysilicon from the US and EU, and an anti-dumping investigation into polysilicon made in South Korea.

China imported 64,600 metric tons of polysilicon in 2011, up 36 percent from a year earlier, with a total import value of $2.59 billion. The US and South Korea accounted for 60 percent of China's imports in 2011, but low prices from these sources saw 80 percent of domestic producers suspend operations as well as 5,000 job losses.

The ministry's statement said polysilicon exporters in the US and South Korea and domestic importers must provide monthly data within 15 days on the amount and value of the raw material sold to China from January to October and have been told to keep providing the information until the preliminary findings of the investigation are announced. EU suppliers had been told to submit the data by May.

Gao Honglin, deputy secretary-general of the China Photovoltaic Industry Alliance, said that the move by the Commerce Ministry will have a beneficial effect on domestic polysilicon producers.

"The move can also effectively avoid an import rush in polysilicon before the ministry gives its anti-dumping and countervailing duty rulings," Gao said.

She added that the ministry's decision was in accordance with global trade practices as the EU and US have taken the same measures on Chinese exports.

Li Junfeng, head of the China Renewable Energy Industry Association, expressed opposition to all types of trade remedies in the solar industry that drive up costs.

Contact the writers at lijiabao@chinadaily.com.cn and dujuan@chinadaily.com.cn