UPDATE: China Industry Group Says Wind Tower Tariffs May Hurt U.S. Industry

A Chinese industry group said Thursday that a U.S. decision to impose tariffs on Chinese wind-turbine towers will have a "negative effect" on related U.S. industries and is an attempt to conceal that U.S. tower manufacturers aren't competitive.

The statement, issued by the China Chamber of Commerce for Import and Export of Machinery and Electronic Products, is the latest salvo in an escalating battle between China and the U.S. over renewables trade. Both sides have been engaged in a tit-for-tat over the past three weeks as they accuse each other of providing illegal subsidies to prop up their sectors.

"Chinese wind-turbine towers are favored by large-scale U.S. wind-power operators and have helped popularize wind power in the U.S.," the CCCME said.

Although China's commerce ministry declined to comment, its foreign ministry said the dispute was best solved through negotiation and consultation. "Resorting to protectionist measures will not help solve these frictions; it will harm business ties between the two," Chinese foreign ministry spokesman Liu Weimin said Thursday at a regular news briefing.

The U.S. Commerce Department said Wednesday that it would slap tariffs between 13.74% and 26% on Chinese wind-tower suppliers after an investigation revealed that they received illegal subsidies.

The ruling comes almost one week after China's commerce ministry said U.S. support for six clean-energy projects violated World Trade Organization rules and acted as barriers to trade. That was preceded even earlier by a U.S. decision to slap 31% tariffs on some Chinese solar-panel makers.

Among those hardest hit by the latest tariffs are a group of Chinese subsidiaries under CS Wind and Titan, which sell towers in the U.S. mainly to European and U.S. wind-turbine manufacturers. Vestas Wind Systems A/S (VWDRY), Siemens AG (SI) and General Electric Co. (GE) are some of their customers, according to Denmark-based Make Consulting.

CS Wind alone represented almost 65% of all Asian tower imports to the U.S. market over the past two years, Make Consulting said in a Jan. 19 note to subscribers.

The impact will likely be minimal on Chinese wind-turbine manufacturers such as Sinovel Wind Group (601558.SH) and Xinjiang Goldwind Science & Technology Co. (002202.SZ), which have relatively few projects in the U.S. compared with their foreign counterparts.

"Vestas and Siemens could be the most impacted as CS Wind's largest U.S. customers," Make Consulting said. "This will erode Vestas's cost-cutting strategies during a trying time of weak earnings and significant layoffs."

GE Energy could see an impact as it buys towers from Titan and Chinese tower manufacturer Chengxi Shipyard, it added.

-By Wayne Ma and Sarah Chen, Dow Jones Newswires; [phone]; [e-mail]

--Keith Johnson in Washington and Sara Chen in Beijing contributed to this story.