Communication from China key to settling sales dispute: experts

The European Union's endorsement of an agreement that settled a dispute with China over solar panel sales in the EU should be credited mostly to the Chinese government's "great concerns" about the matter and "efficient communication" with the EU, Chinese trade experts said.

The settlement also sends a strong signal about Sino-EU economic and trade ties, avoiding the possibility of a trade war between the major economies worldwide, and setting a good example on how the two sides can solve future trade disagreements through consultation and communication, they said.

The European Commission, the EU's executive arm, on Friday endorsed a negotiated settlement with China that sets a minimum price and a volume limit on EU imports of Chinese solar panels through 2015.

The agreement will take effect on Tuesday. Chinese manufacturers that agree to it will avoid punitive duties that the 28-nation bloc had planned to impose.

The European Commission said an overwhelming majority of member states voted in favor of the deal and no member state voted against it.

"China's top leadership has played a key role in bringing a good solution to the dispute," said Chen Xin, director of the Institute of European Studies at the Chinese Academy of Social Sciences.

He Maochun, director of the Economy and Diplomacy Research Center at Tsinghua University, said: "All levels of the Chinese government — including the State Council, led by Premier Li Keqiang — got involved in the deal. The consultations were highly efficient, and it is the first time that such a case has raised such high concerns from the government."

After the EU announced plans to investigate China's solar exports, China repeatedly expressed opposition to the investigation and tariffs, and government officials, led by Li, sought consultations with the EU at various levels.

During his nine-day visit to four Asian and European countries in May, his first such trip since he assumed office, the premier expressed great concern about the deal on many occasions and he repeatedly said China opposes trade protectionism and any sort of abuse of trade cases.

After Li returned from Europe, he held talks with European Commission President Jose Manuel Barroso over the phone, emphasizing China's stance on the issue, and pointed out that the solar panel dispute affected China's major economic interests.

Cui Hongjian, director of European studies at the China Institute of International Studies, said, "We can say it's a new attempt at solving trade disputes through the involvement of high-level officials."

Duncan Freeman, senior researcher of Brussels Institute of Contemporary Chinese Studies, agreed. "I am impressed that Premier Li is diplomatically active and forceful in approaching the problems and that he is solution-oriented," he said.

The solar panel case is the largest trade investigation that the European Commission has undertaken. In 2011, the EU's imports of solar goods from China were valued at 21 billion euros ($27.9 billion).

China's solar panel exports rely heavily on the European market, with 80 percent of the nation's exports going to Europe. More than 1,000 industrial companies and 400,000 jobs are in the sector.

While he sought consultations with top EU officials, Li also encouraged the domestic industrial players to invest in innovation and strive to create a business-friendly environment back home.

In a visit to Hebei province in June, he chose to tour Jinglong Co, a photovoltaic company in Xingtai, when he called for Chinese companies to strengthen innovation and the domestic market while stabilizing the overseas markets.

In mid-July, the State Council launched detailed guidelines to promote domestic consumption of PV products and facilitate sustainable development of the industry.

The final settlement of the solar dispute with the EU prevented the outbreak of a trade war, and it also provides a "new model" for solving trade disputes.

"The solutions from Brussels are welcomed and appreciated, and both sides have set an example for dealing with disputes," said Chi Fulin, president of the China Institute for Reform and Development, a think tank.

Europe is China's largest trading partner, while for the EU, China is second only to the United States. Chinese statistics showed that bilateral trade reached $546 billion last year.

"Trade friction is unavoidable between China and the EU, but the key is how to solve it, and the solar panel case is a good example to follow," Chen said.

While China maintains the world's second-largest economy and pledges to expand domestic consumption, the debt-ridden EU does not want to lose out in the Chinese market, experts said.

"China and the EU are very reliant on each other, and economic cooperation will deepen in the future," Chen said.

"China is an important market for the EU, especially given the nation's commitment to expanding consumption."

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