China, EU to hold talks on solar dispute

China said Tuesday it will this week hold talks with the European Union in a bid to resolve a dispute over solar panels and other business issues, as tensions between the two risk escalating into a trade war.

The two sides have "tentatively decided" to hold the annual ministerial-level meeting of the joint economic and trade commission on Friday in Beijing, said Shen Danyang, spokesman for the Ministry of Commerce.

"At this conference, the two sides will seriously review what happened over the past year in bilateral trade relations and study how to resolve (the) problems, including the dispute over photovoltaic (solar panel) trade," he told reporters.

China's Minister of Commerce Gao Hucheng and EU Trade Commissioner Karel De Gucht will jointly preside over the talks, Shen added.

"We believe both sides will cherish the chance and ... in a pragmatic manner make joint efforts to reach an agreement (on the solar issue) that is acceptable to both as soon as possible," he said.

The European Commission, the EU's executive arm, levied an initial average tariff of 11.8 percent this month, which will rise to 47.6 percent on August 6 if there are no negotiations based on a Chinese commitment to address the problem.

In addition to solar cells, Brussels and Beijing are also involved in a series of disputes covering other products, ranging from steel pipes to wine, that have sparked fears of a trade war.

China said this month it will deal "appropriately" with the EU's decision to challenge it at the World Trade Organisation after Beijing slapped duties on some steel products.

China has launched a probe into imports of EU wine and chemicals amid accusations it is selling goods below cost -- a process known as "dumping" -- while the EU has threatened an investigation into the country's telecom equipment firms.

The tit-for-tat trade measures have triggered concerns over the repercussions they may cause to broader business relations between the two.

"We are very concerned with this issue and any trade-related issues that reach this level," Adam Dunnett, secretary general of the European Union Chamber of Commerce in China, told AFP Tuesday about the solar dispute.

"We... hope that both parties can come together quickly to solve them for the greater interest of the overall trade and investment relationship that is very valuable and important to both economies."

Total trade between the two sides fell 3.7 percent year-on-year in 2012, with China's imports from the bloc rising 0.4 percent to $212 billion, while shipments in the opposite direction tumbled 6.2 percent to $334 billion, Chinese customs data showed.

According to Chinese industry figures, China exported $35.8 billion of solar products in 2011, more than 60 percent of them to the EU, while it imported $7.5 billion-worth of European solar equipment and raw materials.

Increasing trade frictions, combined with other factors including a stronger Chinese yuan, weak foreign demand and rising costs, have clouded the outlook for China's exports this year, Shen said.

The overall trade situation remains "grave", he said, citing findings from a survey of more than 1000 exporters by the ministry.

"We will have to overcome many, many difficulties in order to achieve our annual target (for trade growth)," he said, which has been set at eight percent for this year.