BRUSSELS, Feb 5 (Reuters) - Allegations by European producers of glass used in solar panels that Chinese competitors are exporting at unfairly low prices could open up a new front in the trade battle between the European Union and China.

The EU ProSun Glass group, whose members say they represent more than half of EU solar glass production, said it had filed a complaint with the European Commission last month but declined to say exactly when.

The group is asking the EU's executive to investigate whether Chinese companies are 'dumping' their product - selling at below domestic prices or below cost.

Solar glass accounts for a tiny fraction of the EU's imports of goods from China, which totalled 293 billion euros ($397 billion) in 2011, but the complaint marks a fresh challenge by European businesses to Chinese exporters and the Beijing government.

The Commission has 45 days after a complaint has been lodged to decide whether or not to start an investigation.

Last year, it launched its largest investigation to date, into alleged dumping of, and subsidies for, an annual 21 billion euros of solar panels and components China exports to the EU.

The EU ProSun Glass group, led by European sector leader GMB of Germany, said Chinese peers had a manufacturing capacity of 400 million square metres, double total global demand.

'They're ending up smashing glass that they've produced. It's financial lunacy and also a total waste of energy. This is supposed to be a renewable energy product,' said Ulrich Frei, president of EU ProSun Glass.

'It's only possible because the Chinese government is covering losses and because they are benefiting from cheap credit and subsidies for energy,' he added.

Frei said the group was still considering whether to launch a related complaint against China regarding subsidies.

Frei is managing director of Liechtenstein-based Interfloat, which invested more than 50 million euros in 2008 to transform a television tube factory in Tschernitz, Germany, into a solar glass plant for subsidiary GMB.

The group says duties of more than 100 percent are required to bring Chinese prices of below 4 euros per square metre to a breakeven level of 7 to 9 euros.

It says China's exports to the EU have risen to 8 million square metres, a 25-30 percent share of a 200-250 million euro market, and a fourfold increase in four years.

($1 = 0.7376 euros)

(Reporting by Philip Blenkinsop; Editing by Catherine Evans) Keywords: EU CHINA/TRADE

(philip.blenkinsop@thomsonreuters.com)(+32 2 287 6838)(Reuters Messaging: philip.blenkinsop.thomsonreuters.com@reuters.net)

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