Solar Wars: Now China Will Investigate US Firms

When countries fight over trade, you usually assume that they have meaningful things to fight over. That is, there is something at stake. I am thus befuddled by the likes of the US, China and the European Union going at it tooth and nail over solar panels when (a) the global market for them is small and (b) they are seldom central to national interests. Sure there is lip service about paving the way for the green economy and so forth, but let's just say solar panel manufacturing doesn't exactly represent the commanding heights of the economy circa 2012.

In an act of gamesmanship, however, the Chinese government is now investigating American firms for receiving government subsidies:

China's Commerce Ministry said Friday that it is investigating possible solar equipment subsidies by the U.S. and South Korea and their impact on Chinese manufacturers, widening a trade spat at a time of oversupply and weakening demand for solar power equipment. The ministry has launched an anti-dumping and anti-subsidy probe into polysilicon imports from the U.S...

The timing is awfully suspicious, coming right after Chinese solar manufacturers' sales in the United States have been heavily dented by American-imposed duties. Yes, it's likely a tit-for-tat response:

In May, China said preliminary findings from a probe of six clean-energy projects in five U.S. states showed violations of international trade law. The U.S. in March imposed preliminary anti-subsidy duties of 3% to 5% on Chinese solar panels, followed by anti-dumping tariffs ranging from 31% to nearly 250% in May. As a result, Chinese solar sales to the U.S. fell 45% in May and 64% in April from year-earlier levels to $124.1 million and $70.7 million respectively, the Coalition for American Solar Manufacturing said. 

Again, I am not entirely certain if these erstwhile trade combatants really view solar as an important future industry, or whether it so happens to be a convenient issue to air their grievances against one another insofar as government supports are more likely to exist here given the industry's nascent characteristics. Certainly there's little sex appeal to this trade spat, adding to the overall mystery.