China Starts Probe of Wine After EU Solar Tariffs

China said it started an anti-dumping and anti-subsidy investigation of wine imports from the European Union after the 27-nation bloc yesterday imposed tariffs on Chinese solar panels.

The EU yesterday announced tariffs as high as 67.9 percent on solar panels from China, which will be implemented initially at a lower rate of 11.8 percent. China’s Ministry of Commerce responded today by saying the country “firmly” opposes the EU decision and in the same statement said that Chinese authorities had started the probe of wine imports.

Growing trade tensions between China and the EU puts at risk a relationship that generated $168 billion of exports and imports in the first four months of this year, according to Chinese government statistics. The dispute over solar shipments comes after economic growth in China slowed in the first quarter to 7.7 percent and the euro-area economy reported a sixth quarter of recession.

“It’s a signal,” said Shen Jianguang, chief Asia economist at Mizuho Securities Asia Ltd. China had said in the past that “there will be consequences, so they have to back it up with action.”

China’s wine imports rose 8.9 percent to 430 million litres in 2012, according to data from China’s customs agency. The imports were valued at about $2.57 billion, it said. The EU region accounted for more than two-thirds of the imports, with France being the biggest export country, it said.

EU Reaction

China’s investigation is based on requests from the domestic wine sector and is normal, Liu Danyang, an official at the Commerce Ministry’s Bureau of Fair Trade for Imports and Exports, said in separate comments posted on the ministry’s website today.

The European Commission, the EU’s executive arm, pledged to follow the Chinese investigation “very closely” and said it didn’t believe wine producers in Europe were selling at dumped prices on the Mainland.

“We take note of the Chinese announcement,” Roger Waite, a commission spokesman, told reporters today in Brussels.

EU wine exports to China in 2012 were worth 763 million euros, or 8.6 percent of European wine exports, Waite said. Of that sum, France accounted for 546 million euros, he said.

Italian Winemaker

Even so, today’s announcement isn’t worrying Italian wine maker Podernuovo a Palazzone.

Giovanni Bulgari, chief executive officer at the wine producer, said he is looking to sell a quarter of his first vintage, or about 25,000 bottles here.

“China is a market where wine is starting to be appreciated,” he said in an interview in Shanghai, where he is promoting his wines.

The Asian nation may surpass the U.S. to become the world’s biggest wine market by 2023, according to estimates by Treasury Wine Estates Ltd., the world’s second-largest wine company.

A commentary published by China’s official Xinhua News Agency today said the nation hopes the EU can show “good faith” in a new round of negotiations on the solar trade issue that may start soon. The article, attributed to reporters Zhang Zhengfu and Chong Dahai, also said the EU’s decision to impose a temporary tariff of 11.8 percent instead of 47.6 percent showed the dispute could be solved through negotiation.

Chinese Commerce Ministry spokesman Shen Danyang, in its statement today, said trade was an important foundation for ties with the EU and that China doesn’t want to see the solar dispute affect the broader relationship.

“Both sides understand the relationship is very important; having a trade dispute is quite normal when you have such a big trade flow,” Mizuho’s Shen said. “It’s more likely they will reach an agreement than a trade war.”

In a statement yesterday, the French government praised the commission’s decision to introduce provisional anti-dumping duties on Chinese solar panels, calling it “balanced and responsible,” and urged efforts to seek an eventual negotiated settlement with China.

— With assistance by Liza Lin

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