BEIJING, May 16 (UPI) -- China warned that the European Union's proposed levying of punitive duties on Chinese solar panels would "severely impair" bilateral trade ties.
The comments Thursday by Ministry of Commerce spokesman Shen Danyang came after the European Commission agreed to a proposal to levy provisional duties ranging from 37-68 percent on Chinese solar panels, Chinese state-run news agency Xinhua reports.
The proposals will be voted on by EU members and a preliminary decision is expected early next month.
Levies on Chinese modules are already in place in the United States following similar action. In March, the European Commission started registration of solar products imported into the European Union from China in anticipation of its levies.
Another Ministry of Commerce spokesman, Yao Jian, last week said that China firmly opposes the European Union's tariffs on Chinese solar exports and will defend the interests of Chinese companies if the European Union insists on the measures, China Daily reports.
Meanwhile, it appears Beijing is holding out on announcing the preliminary rulings on its anti-dumping and anti-subsidy investigations into solar-grade polysilicon from the United States, the European Union and South Korea, until the European Union's decision on imposing punitive duties on Chinese-made solar panels is known.
China launched the investigation into the U.S. and South Korean imports last July and in November launched anti-dumping and anti-subsidy investigations into the same product from the European Union.
"The (Chinese) investigations have been near their conclusion for quite some time," China Daily quoted an unnamed source with China's Ministry of Commerce as saying.
Market research firm HIS, in a report released Tuesday, said the EU antidumping duties are likely to price Chinese solar modules out of the European market.
Furthermore, HIS said the proposed EU levies, coupled with the U.S. tariffs, are likely to speed up the consolidation of the Chinese module supplier base and result in more bankruptcies.
The Chinese solar sector has suffered from overcapacity after brisk expansion, supported by cheap loans and preferential government policies. In March, China's largest PV company, Suntech Power, declared bankruptcy.
When the EU antidumping duties go into effect, "prices for Chinese modules will rise dramatically as they cannot absorb these additional costs due to the poor state of their balance sheets," said Ash Sharma, senior director of solar research for market research firm HIS, in a statement.
"This likely will force many Chinese PV module suppliers out of the European market and could spur rising costs for installations."