EU probes into alleged grants for China solar panel makers (2)

EU Trade Commissioner Karel De Gucht said last month that he believed the two sides would avoid a trade war.

The latest subsidy case has been raised following a complaint by the EU ProSun group of 25 European solar panel firms led by Germany's SolarWorld, the same group that had complained of dumping.

The Chinese government did not immediately respond to the EU decision to go ahead with an investigation but the move comes within a week of China lodging a complaint with the World Trade Organization accusing Italy and Greece of illegally favoring domestic solar panel producers in promoting new solar power installations and warning it could put tariffs on EU exports of the raw material polysilicon.

Chinese companies sold about 21 billion euros (US$27 billion) worth of solar panels and components to the EU in 2011 - about 60 percent of all Chinese exports of the products and some 7 percent of all Chinese exports to the EU.

Chinese producers include Yingli Green Energy, Suntech Power Holdings Co and Trina Solar Ltd. Trina says Chinese solar companies' cost advantages are due to their high production levels, leading to economies of scale, rather than any state subsidy.

While it produces quantities of photovoltaic power generation modules totalling over 1,000 megawatts, many European makers make only smaller volumes of several hundred megawatts, it says.

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