The European Commission is likely to launch an anti-dumping investigation against China's solar industry, the China New Energy Chamber of Commerce said on Wednesday as it called for dialogue to settle the dispute.

"The aftermath of Europe's investigation once launched will be much more severe than the one initiated by the US," said Liu Hanyuan, vice-president of the chamber, which represents China's private sector in the field of new energy.

Europe is China's largest solar market, and accounts for about 70 percent of the global market.

"Meanwhile, China is still importing key equipment for solar-product manufacturing from Germany, as well as polysilicon, a key material in the photovoltaic industry," Liu said.

China imported 40,000 tons of polysilicon in the first half of the year, an increase of 34 percent and a new high, according to latest figures from the General Administration of Customs.

Germany accounts for 20 percent of the imports. Wacker Chemie AG, the Germany-based polysilicon maker and the world's second-largest, is opposing the filing, which seeks import tariffs on solar goods from China.

"We are convinced that protectionist measures will not help the domestic solar industry, but rather impair the photovoltaic technology's future prospects," the company said in a statement.

China is Wacker Chemie's second-largest market, representing about 20 percent of its global sales in 2011.

There is a 45-day window before the European Commission's decision to launch an investigation. Two-thirds of that time has passed since German's SolarWorld AG filed its complaint with the European Commission on July 24.

Facing shrinking overseas market, Chinese companies are changing their strategy. "We are establishing a global manufacturing base outside of China," said Stephen Cai, CEO of the China Sunergy (Nanjing) Co.

"Other measures include technology advance and cost reduction, in the hope that grid parity can be realized soon."

Meanwhile, bankruptcy rumors have plagued China's leading PV makers, including Suntech Power Holdings Co and LDK Solar.

China's top 10 PV makers have combined debts of $17.5 billion, leading the whole industry to the brink of bankruptcy, according to data from US investment agency Maxim Group.

Based on preliminary results of domestically traded photovoltaic companies for the first half, nearly 80 percent have slashed their earning forecasts.

Liu said the government should change its policy from building the country into the largest solar manufacturing base into a major solar-application market.

China has raised its solar generating target for the Five Year Plan period (2011-15) to 21 gigawatts from 5 gW initially.

Contact the writer at [email protected]