June 5 - Tensions between two of the world's biggest trading blocs are increasing. China says it's investigating European Union wine after the EU took action over Chinese solar panels. As Joanna Partridge reports, there are fears the trade row could prove costly.
Retaliation from China -- that many in Europe had feared. Beijing is investigating price dumping and subsidies for European Union wine - after the EU said it would impose import duties on Chinese solar panels. Brussels had compromised by reducing its suggested tariffs, but that clearly wasn't enough for China's foreign ministry. SOUNDBITE: CHINESE FOREIGN MINISTRY SPOKESMAN HONG LEI SAYING (Mandarin): "We hope the European Union will meet China at some common ground and will not take any measures towards protectionism. Otherwise, the EU will only harm others and gain no benefits." Many European solar panel makers welcome the duties which will come into effect on 6th June. They say they've been priced out the market by cheap Chinese imports. Laurent Quittre is President of Belgian manufacturer Issol. SOUNDBITE: PRESIDENT AND FOUNDER OF ISSOL, LAURENT QUITTRE, SAYING (English): "We are today 55 people, but if we come back to fair rules I think we can increase again to 200 people. It's clearly a need of better rules so that everybody, China and Europe, can make fair business." But not everyone in Europe agrees. Germany and other member states complained, afraid it would spark a trade war with China. And those fears have been partially realised. Chateau Beychevelle in the south of France has benefitted from China's growing taste for wine. Due to its logo, it's known there as the "dragon boat" wine. And the cost of its vintages has shot up thanks to its popularity with Chinese drinkers. China imported 430 million litres of wine last year. Over two-thirds of that came from the EU, according to Chinese customs figures. Imports from France alone came to 170 million litres. The EU is China's most important trading partner. But 18 of Brussels 31 ongoing trade investigations involve China. The onus is on Brussels and Beijing to resolve the solar panels case. If not, China could impose duties on European wines, and possibly interrupt the flow of other vital industries.