On May 24th local time, EU member states will vote on the proposal of the European Commission to impose tariffs on Chinese photovoltaic products. On June 6th, the preliminary ruling results will be officially announced. Before these two critical moments arrived, China had already made multiple efforts to seek a turning point. However, the price commitment plan proposed by the China Chamber of Commerce for Import and Export of Mechanical and Electrical Products was rejected earlier. At present, the Ministry of Commerce has gone to Europe for final negotiations on this case. Experts believe that no matter what plan is ultimately achieved, it will have a limiting effect, and China's photovoltaic industry will inevitably be affected.

EU rejects proposal from Chamber of Commerce for Mechanical and Electrical Industries

The voting time is getting closer and closer. After multiple communications and consultations between the Chinese government and the European Commission, both parties have agreed that the China Chamber of Commerce for Import and Export of Machinery and Electrical Products (referred to as the Chamber) will represent the Chinese photovoltaic industry in negotiations with the European Commission regarding the "price commitment" issue in this case.

It is understood that the specific content of the "price commitment" negotiation is: China promises to export photovoltaic products to Europe at the lowest price and set a specific time limit; China has promised to limit its annual exports of components to Europe to a certain scale. In exchange, the EU will not take anti-dumping measures against Chinese photovoltaic products.

The New York Times reported that the negotiations not only involve the European Union, but also the US government. However, the Chamber of Commerce for Machinery and Electronics recently announced that the European side directly rejected the negotiation proposal put forward by the Chinese industry, and did not respond to the questions and explanations raised by the negotiation working group. According to industry insiders' analysis, there is no doubt that the preliminary ruling will be passed unless Germany votes against it in the final ruling. Germany is the largest concentration of the photovoltaic industry in Europe, and SolarWorld, which initiated the anti-dumping and countervailing measures, is a German company.

There is another turning point before the preliminary ruling is announced

The last game between China and Europe is not over yet. According to reports, the Fair Trade Bureau of the Chinese Ministry of Commerce has gone to Europe for final negotiations on this case. Industry insiders believe that if Chinese photovoltaic companies do not want to be subject to tariffs, they must make concessions. After preliminary communication, two alternative solutions have been proposed: one is to impose quantity restrictions on China's exports to the EU, and the other is that Chinese photovoltaic companies must commit to raising prices.

In addition to making concessions, the Chinese government has another bargaining chip in the EU photovoltaic anti-dumping negotiations. Previously, at a routine press conference held by the Ministry of Commerce on May 16th, spokesperson Shen Danyang stated that China will announce anti-dumping and countervailing tariffs on polysilicon from Europe, the United States, and South Korea in June.

Impact: The photovoltaic industry will inevitably be affected

Experts believe that both quantity restrictions and price commitments will have a restrictive impact on Chinese photovoltaic companies, and the photovoltaic industry will inevitably be affected.

In the past five years, China's photovoltaic industry has consistently ranked first in the world in terms of production, accounting for over half of the European market. Although the export value of Chinese solar photovoltaic products to Europe in 2012 was 11.19 billion US dollars, a year-on-year decrease of 45.1%, it still accounted for nearly half of China's total export value of 23.3 billion US dollars of photovoltaic products. The EU's restrictions may become the last straw that crushes a large number of photovoltaic companies.

Analysts from Hongyuan Securities believe that the local production capacity in the European Union is about 3GW, while the demand is about 12GW. Insufficient production capacity enables companies with brand advantages to maintain exports to the EU, mainly affecting prices. The shipment volume of second tier enterprises will be greatly affected, and the photovoltaic industry may face a fierce reshuffle process.