China rejects clean energy probe, calls US unfair

A senior Chinese official rejected a US trade complaint about Beijing's clean energy policy and said today that Washington might be improperly supporting its own industry.

world Updated: Oct 17, 2010 19:56 IST

A senior Chinese official rejected a US trade complaint about Beijing's clean energy policy and said on Sunday that Washington might be improperly supporting its own industry. The US government said Friday it would investigate complaints by a labor union that Beijing unfairly subsidizes its producers of wind and solar equipment.

"Chinese subsidies to new energy companies are much smaller than those of the US government," said Zhang Guobao, director of the Cabinet's National Energy Administration, at a news conference. "If the US government can subsidize companies, then why can't we?" The complaint by the United Steelworkers adds to strains between Washington and Beijing over trade in tires, steel, chicken, movies and other goods. It says Chinese producers can sell wind and solar equipment at lower prices abroad because they get subsidies that are prohibited by global trade rules.

Zhang countered that Washington might be improperly supporting its own industry. He cited what he said were rules on spending of US government money for solar energy that require equipment to be domestically made.

"If what I said is right, it is the United States that should be sued, not us," he said.

The unusually prompt, high-level Chinese response reflects Beijing's growing confidence in rejecting U.S. pressure over trade and other issues, as well as its determination to develop high-tech industry.

The communist government is aggressively promoting wind, solar and other renewable energy to curb surging demand for imported oil and gas. It is trying to build up Chinese equipment suppliers to capture the economic benefits of a fast-growing industry. In a statement Saturday, the Commerce Ministry said Washington's complaint signals the US does not support China's efforts at improving the environment.

Zhang said 50 percent of clean energy equipment installed in China last year was imported and suppliers such as General Electric Co. have made substantial sales.

"Once we reveal these facts to the world, the (US) complaint will be shown to be groundless, and all the American subsidies will be exposed," he said.

If the U.S. investigation finds the union complaint true, the Obama administration could sue China in the World Trade Organization. A favorable WTO ruling would allow Washington to impose penalties on Chinese imports unless Beijing repealed any support deemed to be improper.

Foreign business groups have long complained that in wind, Beijing is improperly supporting fledgling domestic clean energy producers by restricting access to its market. They say global suppliers of wind turbines are shut out of projects paid for by the central government, which picks equipment based only on its upfront price rather than the long-term cost, which for more durable foreign equipment is much lower.

Zhang rejected their complaints: "Those foreign companies didn't win the bid because their prices are much higher than Chinese prices."

In solar power, China's Suntech Holdings Ltd. is one of the biggest global equipment producers and several other companies also are major suppliers.

In wind, Chinese producers are only starting to export. Industry analysts say they lag in technology but offer prices up to 50 percent lower than foreign rivals.

One turbine maker, Goldwind Science & Technology Ltd., installed three windmills in a Minnesota farmer's field last year in the first effort by a Chinese producer to break into the U.S. market. Zhang questioned how such a small market presence abroad could threaten American companies.

"We've only exported three windmills to the United States," he said. "What impact does this have?"

First Published: Oct 17, 2010 19:50 IST