UPDATE 1-China says will protect China firms' interests amid EU e-bike probe

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BEIJING, Oct 20 (Reuters) - China's commerce ministry said it will defend Chinese companies' interests amid an EU investigation into Chinese electric bicycles (e-bikes), and urged the European Union to respect World Trade Organization rules.

"The Chinese government will closely watch the development of the case, and take necessary measures to resolutely defend Chinese companies' legitimate interests," ministry official Wang Hejun said in a statement.

He said the European Commission had launched the investigation on Friday and warned the EU to not let it become a "new case of trade protectionism".

The European Bicycle Manufacturers Association (EBMA) this month lodged a complaint alleging that Chinese companies were flooding the market with e-bikes with the help of unfair subsidies at prices sometimes below the cost of production.

The EU investigation is the latest in a string of probes into Chinese exports ranging from solar panels to steel, and could raise trade tensions with Beijing, particularly with a subsidy inquiry into the support provided by the Chinese state.

Conventional bicycles have already been a flashpoint.

The EU blamed China last December for scuppering a global environmental trade deal by insisting that bicycles be included as a tariff-free green product. Chinese bicycles have been subject to EU anti-dumping duties since 1993.

The EBMA says more than 430,000 Chinese e-bikes were sold in the European Union in 2016, a 40 percent increase on the previous year, and forecasts the figure will rise to around 800,000 in 2017. (Reporting by Beijing Monitoring Desk and Michael Martina; Editing by Nick Macfie)