China Warns

China Warns Solar-Panel Tariff May Backfire

By WAYNE MA 5/18/2012

BEIJING—China unleashed a storm of protest across multiple outlets criticizing the U.S. decision to impose a 31% antidumping tariff on Chinese solar-panel makers and said the action could backfire on U.S. industries.

The U.S. decision against China raises trade tensions, which already were heightened because of issues ranging from China's export quota on rare-earth minerals to imports of Iranian crude. It also comes during a U.S. election year, in which the Obama administration has been criticized for not getting tough on China's trade activities or currency valuation.

Chinese commerce ministry spokesman Shen Danyang said in a statement Friday that the ruling provoked trade friction in clean energy and sent a protectionist signal to the world, which would not only damage Chinese companies but also harm U.S. users downstream.

"U.S. tariffs will hurt both countries because China imports a large amount of raw materials and equipment from the U.S. to produce solar panels, and it exports such goods to the U.S.," Mr. Shen said.

Chinese state television also denounced the decision as "protectionist," and "unreasonable and without basis."

"We fear that if these tariffs are levied in full, Chinese companies may have no choice but to exit the U.S. market," an anchorwoman with China Central Television said.

The Chinese Renewable Energy Industries Association, which acts as an intermediary between domestic renewable-energy companies and the government, said the decision was "a hasty act of trade protectionism" and wasn't based on market considerations.

It urged the U.S to "review the facts and make the right decision without being influenced by U.S. elections" and called on the Chinese government and industry bodies to appeal the decision.

A Thursday slump in shares of Chinese panel makers listed in the U.S. spread to Hong Kong-listed solar cell and wafer companies such as GCL-Poly, Comtec Solar and Trony Solar, which slid between 4% and 7%. The bulk of their exports are sent to China.

However, shares in Taiwan-listed solar companies were mixed, as some manufacturing may be rerouted to the island. Jack Hsieh, spokesman at Motech Technology, the country's biggest solar-cell maker, said demand rose in the past three months "as the Chinese gradually outsourced their production." Neo Solar Power said diverted orders from China could likely mean stronger pricing power for Taiwanese firms.

The U.S. Commerce Department said the ruling was preliminary and that companies will have the chance to challenge the tariffs before they are made final later this year. Those being hit include Suntech Power Holdings Co., Trina Solar Ltd. and Yingli Green Energy Holding Co.

The penalties come on top of U.S. antisubsidy tariffs ranging from about 3% to 5% levied in March on Chinese solar companies.

"China's exported solar panels have a relatively competitive price, mainly because of technical research and development work done by Chinese companies," China foreign ministry spokesman Hong Lei said Friday.

"At the same time, China has imported a lot of raw materials and production equipment from the U.S., and this has benefited the U.S. economy," he said.

"This action by the U.S. has hurt cooperation between China and the U.S. in the renewable energy sector, and hurt the U.S. itself. We hope the U.S. will appropriately resolve this issue."