Failed talks

The protests came on the heels of an announcement Wednesday by the China Chamber of Commerce for Import and Export of Machinery and Electronic Products that the first-round of negotiations designed to ease the current solar panel trade spat between China and the EU by agreeing on an export price had failed.

At the EU's invitation, the chamber sent a negotiation team and put forward pragmatic price undertaking plans, but the EU side turned them down, refusing to answer questions from the Chinese side, said Wang Guiqing, deputy chief of the chamber.

The EU did not show any sincerity in tackling the problems, leading to a breakdown in talks, the agency said.

Price undertaking basically means exporters raise the export cost of a product to avoid the possibility of an anti-dumping duty.

European PV firms have also lodged a separate complaint accusing their Chinese peers of receiving government subsidies that violate international trade rules.

Heavy blow

The punitive duties, if imposed, could deal a heavy blow to China's already struggling PV industry as it relies on the European market, said Zhang Qian, government relations and business development director at Canadian Solar Inc.

China's PV exports to Europe slumped 45.1 percent year on year to $11.2 billion in 2012, but the value still accounted for nearly half of the country's total shipments, according to statistics from the chamber.

China's PV industry has boomed over the past decade, but is now struggling with excess capacity and weak market demand that has forced some small firms out of business and even put some giants on the brink of bankruptcy.

Worse still, leading solar panel maker Wuxi Suntech, a major subsidiary of the New York-listed Suntech Power based in the eastern Chinese city of Wuxi, declared bankruptcy in March.

China-made PV products would completely lose price competitiveness and EU's orders would be awarded to solar firms from Europe, the United States and even Taiwan, said Hou Wentao, an analyst with Guotai Junan Securities.

China might increase domestic solar panel installations to help the industry hedge against the slumps in exports to Europe, added Hou.

Innovation, New market

"We should change the extensive growth mode and rely more on innovation and technology rather than on cheap labor and resources in grabbing market share and profits," said Meng of China Renewable Energy Society.

Some firms are eyeing emerging markets to help reduce their over-reliance on Europe.  "We will consider exploring the African and Southeast Asian markets in a bid to reduce the risk posed by the excessive reliance on one single market," said Zhang of Canadian Solar Inc.

"Yingli is preparing for the worst. If the punitive duties are levied, we will move our plant to another country," said Wang Yiyu, Yingli's chief strategy officer. "But China's PV industry would then be struck down completely."