China’s trade ministry will investigate solar-grade polysilicon imported from US and South Korean suppliers and their impact on Chinese manufacturers, further escalating a solar trade dispute.

China’s Ministry of Commerce said it would open anti-dumping and anti-subsidy probes on US imported polysilicon as well as an anti-dumping investigation on South Korean imports of the raw materials used to make solar products, Reuters reported. Officials have threatened to issue trade duties on US shipments of polysilicon if the United States moved to penalize Chinise solar companies.

China’s trade ministry, which issued the announcements in two statements on its website, cited preliminary evidence from GCL Poly-Energy Holdings, LDK Solar and Daqo New Energy. The agency launched the investigation following a request by domestic polysilicon manufacturers, including LDK Solar and China Silicon Corp., China’s state-run news agency Xinhua reported. The probe will be completed before July 20, 2013, the ministry said.

Hemlock Semiconductor, a US polycrystalline silicon maker majority-owned by Dow Corning, could be negatively impacted if the Chinese government assesses duties against US manufactured polysilicon sold into China, said Dow Corning CEO Robert Hansen. The action also could threaten the Chinese solar industry’s access to technical collaboration and material supply, which could drive up costs, he said. In the US, more than $1 billion of US exports and potentially thousands of jobs across the solar value chain are at risk, Hansen said.

China imported a record 34,000 metric tons of polysilicon, the majority of which came from the US and South Korean, in the first five months of this year, Xinhua reported. Imports from the US increased 94.5 percent with a price 67 percent lower than the same period last year.

Earlier this year, the US Department of Commerce ruled in favor of companies that charged Chinese exporters had illegally “dumped” their solar panels on the US market below fair market price and imposed two import duties on solar equipment made in China. In May, the department issued a 31 percent, 90-day retroactive tariff on Chinese-made solar panels. In March, it issued a separate tariff of up to 4.73 percent, after determining that the Chinese government provided unfair subsidies that allowed manufacturers there to undercut foreign rivals.