At the start of summer, we heard that China had replaced Germany in silver medal position as the West Midlands' second biggest export market (behind only the US taking gold). So surely the last thing we need now is an EU-China trade war.

Which makes some recent news from Brussels particularly troubling.

The concern is a spat over Chinese imports of solar PV panels and components. This is a market worth €21 billion to Chinese manufacturers, with the EU their biggest customer by far, enjoying an astonishing 80% of the market. I suppose that means four in five of the panels you see on the roofs along your street are likely to have a "Made in China" stamp.

Chinese solar panel manufacturing capacity - concentrated in Jiangsu province - is the world's largest, and has rapidly expanded in recent years to meet a huge demand for renewable energy worldwide, and especially in Europe with its 2020 renewable energy and carbon reduction targets. But with the recession taking hold, and solar subsidies in the form of feed-in tariffs getting slashed, demand has stalled leading to a glut of panels on the market. With domestic demand in China unable to pick up the slack, this has seen prices for panels fall dramatically, and the largest Chinese manufacturers have been reporting disastrous trading.

Against this backdrop, a complaint was filed with the EU Commission back in July by a collection of European solar manufacturers, led by SolarWorld in Germany, claiming that Chinese manufacturers were selling panels into Europe at a loss, and putting European manufacturers out of business.

With Germany enjoying something of a trading "special relationship" with China, it was somewhat embarrassing to Angela Merkel for this complaint to be led by German firms, and she was at pains to give sympathetic nods and assurances during her visit to Beijing in August.

Despite that, the European Commission pressed the red button and launched an anti-dumping investigation on 6th September - the largest ever anti-dumping complaint (in value) heard by the Commission.

However, this dispute has been rumbling for some time, and follows a successful similar action by SolarWorld in the US. This action first drew attention to the 'lavish' government loans and subsidies available in China to their manufacturers, and resulted in the introduction earlier this year of US anti-dumping duties on Chinese solar panels, ranging from 31% to 250%.

The EU investigation is now underway, and could take upwards of 15 months to conclude. However, within nine months the Commission is likely to issue provisional findings, which could see the investigation continue with or without the introduction of provisional anti-dumping duties (typically for six months), or see an end to the investigation.

The Commission will need to decide if the Chinese exporters have been dumping, whether that dumping has caused material injury to EU industry, and whether the imposition of duties or other measures would not be against the EU's economic interests.

This latter "public interest" criterion does not feature in the US regime, and is likely to be a key part of the EU investigation given that the roll out of renewables is a central policy area for Brussels. With some EU countries struggling to meet their renewables deployment targets, the Commission will surely be reluctant to make the task harder or more expensive with import duties.

However, European installers have suffered to maintain margins in recent times as feed in tariffs across the continent have been slashed, with many heavily dependent on cheap Chinese panels.

The situation is made even more complicated by a number of related disputes simmering away, in particular Chinese complaints to the World Trade Organisation that some of the US renewable support programmes violate WTO rules and are harming Chinese businesses.

What we are seeing is an inherent tension between domestic support and encouragement for renewable energy - a public policy ambition shared by most nations - and a global market place for renewable products and services, which demands fair treatment and a level playing field.

But the wider concern is creeping protectionism and the harmful effects on global trade. So far, China's response to the investigation has been muted, calling it "deeply regrettable" but there have been hints of retaliatory measures. Notably, last month Chinese polysilicon manufacturers and winemakers separately filed complaints in China against their EU counterparts.

Midlands businesses are working hard to build mutually beneficial trading relationships with China. For example, local and Chinese companies are exhibiting at the upcoming Solar UK conference at the NEC from 2-4 October, both to exhibit their products or services and to make business connections. There is also a willingness on the part of Chinese sovereign wealth funds and cash rich individuals to invest in new UK infrastructure projects, including here in the West Midlands. A trade war with China would be incredibly damaging to our prospects for economic recovery and job creation.