Ken Silverstein | Oct 28, 2010

The United States is saying that China is subsidizing its wind and solar equipment makers, which is hurting American manufacturers. That complaint is now in the investigatory stage and may be presented to the World Trade Organization.

The irony is that the developed world is pushing China to reduce its greenhouse gas emissions as part of the global climate talks. It's also a bit problematic because the United States is in the throes of a stimulus plan that is trying to build a new energy economy both here and around the world, in part using American ingenuity. To publicly attack a country that would buy the technologies that we produce is wrongheaded.

Now, much of the tough language is the result of mid-term elections whereby politicos are pandering to dislocated voters. To that end, President Obama has always called on the two countries to cooperate more and criticize less. Moreover, China needs the United States to buy its goods while this country needs to China to buy its government debt instruments so as to help finance the debt.

Nevertheless, in October the U.S. Trade Representative Ron Kirk said his office would begin examining claims that China is unfairly protecting its domestic businesses and in doing so, is hurting the exports of this country - all of which could start a trade war and prolong a very difficult economic time period. The United Steelworkers filed the complaint, arguing that China unfairly subsidizes its wind and solar energy products as well as advanced batteries used for energy efficient transportation.

"Green technology will be an engine for the jobs of the future, and this administration is committed to ensuring a level playing field for American workers, businesses and green technology entrepreneurs," says Ambassador Kirk. "We take the United Steelworkers' claims very seriously, and we are vigorously investigating them."

China has responded in a formal statement reported by several news outlets. Zhang Guoba, who head's the country's Ministry of Commerce, says that the United States subsidizes its green energy sector far more heavily than China does. He specifically says that the United States invested $4.6 billion in the first nine months of this year, $3 billion of which went to the wind industry.

Zhang went on to say that the formal accusations made by the U.S. trade representative are a political play. That is, the steel workers are part of the Democratic base in which the politicians need to appeal.

"The U.S. probe into China's clean energy policies sends a signal that the U.S. doesn't support China's hard work on cleaning up the environment," adds Zhang. He calls the petition "irresponsible and baseless."

China's Steady Rise

To be sure, any concerns over unfair trade practices are to be taken seriously. A trade war would invariably cause the nations of the world to close their borders and thereby damage global commerce. That, in turn, would trigger a deeper recession.

But at the same time, the global community must keep its eye on the ball. With the next round of global climate treaty talks to occur in Cancun in the coming weeks, many in the developed world are asking China to become an integral partner. And China has responded to these requests - investing heavily in its green technology and using Western know-how to do it.
 
Indeed, China is now the most attractive location in which to invest in renewable energy projects, according to Ernst & Young. In a report it has published, it says that China's dedication to build out its green energy sector has caused it to steadily climb to the top of its list. Last year, it had tied for the lead with this country.
 
"China's steady rise . has been underpinned by strong and consistent government support for renewable energy," says Ringo Choi, cleantech leader of Greater China at Ernst & Young. "This, together with substantial commitment from industry and the sheer scale of its natural resources, means that its position as top spot for renewable energy investment is well-merited."

China's leaders, of course, don't have to run for office and therefore can do anything they want. But Choi goes on to say that the U.S. is still an attractive place to invest, however, its inability to enact clear energy policies with respect to carbon limits or green energy standards has caused some international investors to pause. He also emphasizes that the green energy movement is expected to play a key role in the global transformation - one that will require collaboration among all stakeholders.

It's a position in which the Pew Center concurs, saying that clean energy grew 230 percent 2005 to 2009 when $162 billion was invested globally. That amount is smaller than the year before but the decline is far less than other industrial sectors including that of oil and gas, it says. The reason China has taken the top spot in the area of clean energy finance is that it has built a strong manufacturing base and an export market to meet renewable energy targets set there.

"Those nations-such as China, Brazil, the United Kingdom, Germany and Spain-with strong, national policies aimed at reducing global warming pollution and incentivizing the use of renewable energy are establishing stronger competitive positions in the clean energy economy," says Pew's report. "The U.S. policy framework for reducing global warming pollution and promoting renewable energy remains uncertain, with comprehensive legislation stalled in Congress."

The United States has the financial muscle along with the intellectual foundation to lead the clean energy movement. It needs all borders to remain open. To that end, China may need to be prodded. But it does not need to be bashed. It's a critical partner and one that is in a position to buy American energy services.

EnergyBiz Insider is nominated for Best Online Column by Media Industry News.

 

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