CHECKING UP: A worker examines silicon ingots in the Hainan manufacturing base of Yingli Green Energy Holding Co. Ltd. (GUO CHENG)

Visitors to the New City District of Baoding, north China's Hebei Province, are always captivated by a grand building, whose mazarine reflection on its glass curtain walls were glistening with mysterious luster. Ablaze with lights, the building was completely powered by solar energy, which was generated by the row upon row of PV cells laid on the titan's surface.

The building is Power Valley Jinjiang International Hotel, a landmark building in the Baoding High-tech Industrial Development Zone, built by Yingli Green Energy Holding Co. Ltd., the frontrunner in the photovoltaic (PV) industry. From 2005 to 2008, Yingli experienced a period of explosive expansion with a growth rate of 1,260.18 percent, and is the industry's top player.

But the solar power business in China is under duress. Miao Liansheng, CEO of Yingli Green Energy and the first man to ring the opening bell in the New York Stock Exchange without wearing a tie, creased his forehead on September 6 when the European Commission launched an investigation into the suspected dumping of solar panels and key components by Chinese producers. The investigation into the biggest import sector ever targeted by the European Commission stems from a complaint by a group of European solar companies, led by Germany's SolarWorld.

"It's totally groundless," Yingli said in its statement following the EU's announcement. However, Yingli should cooperate with the European Commission's investigation and at the same time undergo a transformation in its business model, said Liang Tian, Director of Public Relations for Yingli Green Energy. The company will shift from simply making PV modules to expanding its participation into the design, development and operation of PV power stations as well as providing financial lease services and solar power generation solutions. Furthermore, Yingli plans to enhance its marketing capabilities and will team up with other mutually interested enterprises.

It's not the first time the Chinese solar industry has hit a trade barrier. On November 9, 2011, the U.S. Department of Commerce started its anti-dumping and countervailing duty investigation against Chinese solar products. In May, the United States decided to impose tariffs ranging from 31.14 percent to 249.96 percent on PV products imported from China. The U.S. market is now off limits to Chinese solar cell makers.

"Every year, roughly 70 percent of the solar panels and key components made in China go to the EU market," said Liang. "With the 10-percent loss from the U.S. market, what we are confronting now is whether China's PV industry can survive."

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Responding to the EU's statement on September 6 that it will decide whether penalties should be imposed if the investigation finds Chinese makers were dumping, China's Ministry of Commerce (MOFCOM) quickly issued a response, saying that it "deeply regrets" the EU's course of action.

MOFCOM spokesman Shen Danyang said that restricting Chinese PV battery products would harm both sides and damage the healthy development of the global PV industry and clean energy.

On September 11, the Chinese Government sent a delegation led by Chong Quan, deputy representative for China's international trade talks, to meet with relevant government departments in Germany and France, as well as the European Commission.

In negotiating with Jean-Luc Demarty, the European Commission's Director General for Trade, Chong said that in the face of a severe global economic slowdown "both of us will become losers if a trade war occurs."

In fact, European enterprises, which hold 50 percent of the silicon market in China, now control both ends of the PV industrial chain—raw materials, manufacturing equipment and the installation of PV power system—while China dominates the middle part of the chain—the production of solar cells.

Chong argued the EU should pay attention not only to trade issues regarding China's solar panels but also to the more than 200,000 jobs related to the installation of PV power systems. After all, if the EU levies high tariffs, the global solar industry as a whole will suffer a heavy blow.

During the 15th China-EU Summit held in Brussels on September 20, Chinese Premier Wen Jiabao urged the EU to recognize China's full market economy status and expressed his hope the dispute would be resolved through ongoing dialogue, as the EU's launch of the anti-dumping investigation had triggered strong reactions in China and also raised concerns among EU businesses.