EUROPE’S love-hate relationship with China continues to unfold. Last week I wrote about Germany’s expanding ties with China and the envy this has triggered in Brussels and other EU capitals. This week, the EU-China saga took another turn after the European Commission opened an anti-dumping investigation into imports of Chinese-made solar panels.
The EU move has sparked fears of a damaging Brussels-Beijing trade war. Some in the EU insist that it is time that Chinese companies —which they claim often have strong financial links to the state — were taught a lesson about selling below-cost products in Europe.
Others argue that the EU-China relationship is much too important to be jeopardised by anti-dumping inquiries which — however sensational — represent a minor percentage of EU-China trade.
The solar panel case has been on the EU drawing board for several months, prompting repeated warnings from China that any EU action would hurt the global clean energy sector and lead to damaging tit-for-tat measures.
The inquiry is not unexpected. Under EU law, the Commission is bound to open an anti-dumping inquiry if the complaint satisfies certain basic requirements. Officials say this is the case.
The timing of the investigation is unfortunate, however: it comes just days before the EU and China hold summit talks in Brussels. The meeting on Sept 20 will be the last formal encounter between Premier Wen Jiabao — who has invested much time and effort in developing China’s EU connection — and senior EU policymakers before he hands over the baton to his successor (widely expected to be Vice Premier Li Keqiang).
The EU action follows close on the heels of German Chancellor Angela Merkel’s much-publicised visit to Beijing last week. Ms Merkel has said she wants the dispute over solar panels to be resolved through dialogue, not an anti-dumping investigation. She has also sought to reassure her worried Chinese hosts on the “absolute political will” of eurozone countries to stabilise their currency.
Merkel’s visit coincided with a Chinese announcement that it was purchasing 50 Airbus planes worth over $4bn, the first significant order since a dispute between Beijing and Europe over emissions trading.
Wen’s farewell meeting with the EU should certainly not be soured by the anti-dumping case. There should be no repeat of the acrimony generated at the EU-China summit in 2010 over EU criticism of China’s currency policy.
Both sides have mended fences over the last two years. Discussions continue over human rights, market access and investments. But the eurozone crisis and China’s increased economic clout has led to a change in the EU’s view of China. As such, European Commission President José Manuel Barroso and EU Council President Herman Van Rompuy are likely to focus on the many areas where the EU and China have succeeded in building a stronger partnership rather than on trade and other irritants.
There are initial encouraging signs that Beijing is toning down its earlier rhetoric. In contrast to earlier statements, China’s immediate response to the anti-dumping inquiry has been measured, with no mention of any retaliatory steps.
China sold about 21bn euros in solar panels and components to the EU in 2011 — about 60 per cent of all Chinese exports of the product. Total EU imports from China were valued at 292bn euros last year. Imports of Chinese products subject to trade defence duties total less than one per cent of that amount. The US also imposed duties on solar panel imports from China in May.
Europe’s solar companies are divided over the dumping case. Some such as those that install panels say Europe should welcome Chinese imports because they make solar power more affordable and are essential for the 27-member bloc to achieve its goal of having 20 per cent of energy from renewables by 2020. EU companies that have sold machinery to China to produce photovoltaic cells have also expressed misgivings.