China expects to end solar trade spat with EU next month: official

China expects to resolve a multibillion-US-dollar solar trade spat with the European Union by next month, a senior mainland industry official said yesterday, after a newspaper reported that Beijing had made a new offer to the EU to settle the dispute.

The EU accounts for about half of China's solar exports, which have already been hit hard by the slashing of European subsidies for renewable power because of the impact of the euro-zone debt crisis.

"We reckon there is a big chance for us to defuse the dispute," said Sun Guangbin, secretary general of the solar department of China's Chamber of Commerce for Import and Export of Machinery and Electronic Products, who is involved in China's talks with the EU over the dispute. "We remain highly optimistic about the direction we are moving in."

He declined to comment on a report in the Shanghai Securities News yesterday that China had proposed capping the annual volume of its solar panel exports to the EU and setting a minimum price for its products sold there.

Under the proposal, China would export no more than 10 gigawatts of photovoltaic modules to the EU a year at a minimum price of 50 euro cents per watt, the paper quoted National Development and Reform Commission (NDRC) researcher Wang Sicheng as saying.

Any exports exceeding the limit would be subjected to punitive tariffs, Wang was quoted as saying at a solar industry conference on Thursday. In return, he said, the EU should levy no or low taxes on Chinese solar panels.

EU regulators accused Chinese solar panel makers of selling their products below cost and began to impose duties on imports of Chinese solar panels last month. The initial duty was set at 11.8 per cent and lasts until August 6. If no settlement was reached by then, the average rate would rise to 47.6 per cent - in effect blocking China's access to the European market.

China, whose solar panel production quadrupled between 2009 and 2011, exceeding global demand, has said the EU duties would seriously harm trade ties. Beijing is deciding whether to levy its own duties on imported European solar-grade polysilicon, a raw material used in solar panel production.

In an apparent response to the solar dispute, China began an investigation this month into whether Europe is selling wine in China below cost.

The Shanghai Securities News quoted Wang as saying the NDRC's energy research institute was working with government departments to draft a long-term development plan for the domestic solar industry. He said China aimed to boost its solar power generating capacity to 100,000 megawatts by 2020, up from 800 megawatts at the end of 2010.