China’s leadership transition is complicating talks to resolve a multi-billion-dollar dispute with the European Union over solar panels, pushing both sides closer to placing punitive tariffs on each others’ exports and risking a trade war.
The newly appointed chief of China’s Communist Party Xi Jinping is set to take over the presidency at a national congress in March. But the full line-up of government officials is not yet in place, and China’s current commerce minister is likely to step down after what some have said was a political snub at the party’s congress in November.
EU leaders want to avoid following the United States’ decision last year to impose duties on Chinese solar power products, aware that Europe needs China to help it emerge from three years of economic crisis.
But EU officials and diplomats say they have made little progress, accusing the Chinese of stonewalling, and are unable to get beyond the outgoing commerce minister, Chen Deming. They complain of a limbo in the ministry that will not end until after the March congress.
“There is no clarity on what the new leadership thinks about trade,” said a senior EU official involved in talks with China. “They are stonewalling and the window of opportunity for a solution on solar panels is closing.”
China’s commerce ministry spokesman Shen Danyang told reporters in Beijing this week that officials are conducting consultations and relevant response work with the concerned parties but did not comment on any impact China’s leadership transition is having on negotiations.
Germany, the United States and China are the world’s biggest solar markets and companies are in a race to win contracts as countries seek to limit pollution and global warming.
In a non-binding vote, EU countries approved on Wednesday a request from industry to register solar panels from China, which would allow for retroactive measures if the European Commission agrees to registration and does impose duties.
But the Commission, the EU executive, denied Thursday that the decision by member states signaled Brussels was closer to blocking Chinese solar products. “Let’s not interpret this as suggesting anything. It is simply administrative procedure,” EU trade spokesman John Clancy said in a statement.