Now the issue is critical as an unrelenting oil price rally and a fresh push for green energy from the world's second-biggest power consumer is about to trigger a wave of new investment.

Under the right framework, that investment could go part way to limiting China's reliance on dirty coal or costly imported oil. But without a new policy many fear the worst.

"The policy must be changed," Shi Pengfei, vice-president of the China Wind Energy Association, told Reuters. "Otherwise, there will be damage done to the industry."

"I worry... we may have 5 gigawatts of installed capacity, but not enough electricity being generated from the wind."

Beijing will open bids for the fourth concession project totalling a modest 700 megawatts on Aug. 18, boosting the country's capacity by nearly half with one wind farm in Hebei and two in Inner Mongolia, known for its strong wind.

Many officials hope this will be the last round before a new, fairer investment model is adopted, possibly aided by the reshuffling of China's top energy policy planners.

Last month the government-appointed Chen Deming, a vice-chair of the powerful National Development Reform Commission (NDRC), to take charge of energy issues, replacing Zhang Guobao, seen as a promoter of the controversial bidding system.

"With Zhang Guobao gone, most in the industry are positive that this rule will change, possibly as soon as next year," said one Chinese official, who declined to be named.

With Beijing failing to ensure quality standards and adequate power tariffs, fierce price competition has endangered the future of the high-tech industry in China, already facing escalating cost pressure as global turbine prices rise on surging steel and copper prices and a resurgence of global demand.

"This is a bad influence," said Cao Hua, Chinese sales manager with India's Suzlon Energy Ltd., one of the world's top wind turbine manufacturers.

"The turbine manufacturers have to select cheaper parts. The parts manufacturers have to pick cheaper materials."

PRICE PRESSURES

To secure clean air despite China's soaring energy demand, Beijing plans to expand the installed wind capacity to 5 gigawatts by 2010, up from 1.3 gigawatts in 2005 and compared with 18.4 gigawatts in Germany, the world's largest last year.

At the moment, Beijing auctions off the rights to build large wind farms via a concession model, awarding large projects to bidders offering power supplies at the lowest prices.

This system has led to China's big utilities, such as Huaneng Power International Inc., offering low tariffs to win projects, shaving wind-power prices by about a third in the past two years and shutting out smaller, independent players.

Industry officials prefer feed-in tariff system, which guarantees fixed prices for wind electricity for a certain period to help investors map out business plans. Major wind generators Germany and Spain both use this model.

The officials and activists were also critical of the local content regulations that require 70 percent of wind turbine parts be manufactured in China, a rule that has a higher threshold than the 40 percent demanded for the car sector.

"The risk is that industry develops without proper quality standards and proper electricity regulation standards," said Steve Sawyer from Amsterdam-based Greenpeace International.