The European Commission plans import duties of up to 39.1 percent on Chinese-made glossy paper it says is being dumped on the EU market, escalating trade tensions with China, EU diplomats said.

Indonesian paper giant Asia Pulp and Paper (APP), which exports paper to Europe from China through two subsidiaries, will be the only company to be granted a lower rate at 19.7 percent, diplomats told Reuters.

The EU has started a raft of investigations into booming imports from China -- boosted by a weak yuan -- possibly resulting in new import duties and sparking concerns over growing protectionism.

The duties on coated paper are widely expected to be approved during a meeting of national government representatives early next month. In that case they will launch by Nov. 17, while the EU decides on five-year duties next spring.

"Obviously the Commission is confident that there will be no opposition from national governments," said one EU diplomat.

The duty plan reflects growing pressure on the world's paper industry, prompted by rising pulp prices and international pressure for paper to be sourced from sustainable forests, as well as concerns about China's industrial competitiveness.

Coated fine paper -- used for coffee-table books and glossy brochures -- is a niche market whose growth has suffered since the arrival of the Internet and decline of direct advertising.

EU papermakers have warned that Chinese producers may start competing with Europe's printing industry once they dominate the bloc's paper supply.

The EU must decide by Jan. 2011 whether to impose a separate set of temporary duties to combat illegal Chinese state subsidies for paper producers. It is the first time Europe is challenging China's subsidies, a move that has angered Beijing.

Complaints lodged early this year by EU paper makers, led by the European operations of South Africa's Sappi , prompted the Commission to start the two investigations.

APP is part of the Sinar Mas business empire founded by Indonesia's Widjaja family. (Reuters)