China said on Monday that it would impose preliminary anti-subsidy duties on some imports of U.S. solar-grade polysilicon, a move that could intensify trade tensions between the world's two largest economies.
China's Commerce Ministry said it would hit U.S. imports of the material used to make solar panels with relatively low duties of up to 6.5 percent, amid trade frictions in the struggling global solar industry.
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That follows the ministry's much heftier anti-dumping duties - used for goods sold below market value - of 53.3 to 57 percent on U.S. polysilicon in July, a move which many saw as a bid to protect China's struggling domestic industry. Washington called those duties disappointing.
According to its investigation, "subsidies exist and China's polysilicon industry suffered substantial harm", the ministry said in a statement on its website.
Beginning on September 20, importers of polysilicon from Hemlock Semiconductor Corp and AE Polysilicon Corp will have to pay the duties.
The ministry said other companies, including REC Solar Grade Silicon LCC, REC Advanced Silicon Materials LCC, and MEMC Pasadena Inc., would not be subject to anti-subsidy duties because they had not been subsidised or the rates were too low.
China has also locked horns with the European Union and South Korea over the solar industry.
European companies accuse Chinese rivals of benefiting from unfair state aid, allowing them to dump about 21 billion euros ($28 billion) worth of solar panels at below cost in Europe last year, putting European firms out of business.
Europe planned to impose heavy tariffs on Chinese solar panels but, wary of offending China's leaders and losing business, a majority of EU governments - led by Germany - opposed the plan, which led to the compromise deal in July.
EU governments must decide in December whether to back the July price deal.
China's polysilicon sector, which has around 40 companies employing 30,000 people and has received investment of 100 billion yuan ($16 billion), suffers from low quality and chronic over-capacity as local governments poured in money to feed a fast-growing solar panel industry.
Demand for solar panels has eased since the global financial crisis, forcing governments worldwide to slash solar power subsidies and leaving China sitting on idle capacity and mounting losses.
Of the 69,000 tonnes of solar-grade polysilicon China consumed in January-June, 41,000 tonnes were imported, according to industry data. China's solar panel makers prefer imported polysilicon, which has a higher purity that helps in energy conversion, company executives say.
Domestic business lobbies have been a major force pushing the Commerce Ministry to curb polysilicon imports that exceeded $2.1 billion in 2012.
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