China-U.S 'green' trade row intensifies

BEIJING, Oct. 18 (UPI) -- An investigation by the United States into China's clean energy policies is unjustified and groundless, a Chinese official said.

The investigation, announced Friday by U.S. Trade Representative Ron Kirk, was prompted by a United Steelworkers Union complaint last month accusing China of subsidizing clean energy industries to thwart global competition.

Reacting to the U.S. investigation Sunday during a news conference, Zhang Guobao, vice chairman of China's National Development and Reform Commission said, "the only ones who will be humiliated are themselves.''

Zhang, who also heads China's National Energy Bureau, maintained that Chinese subsidies to clean energy companies were "very small." But the United States had subsidized new energy enterprises with $4.6 billion during the first nine months of 2010, including $3 billion to the wind power sector, he said, state-run news agency Xinhua reports.

As for exports, Zhang noted that his country had exported only three wind turbines to the United States, totaling less than 10,000 kilowatts of generating capacity. But U.S.-based GE, he said, had exported 80,000 kilowatts of wind turbines to China in 2005, reaching to about 340,000 kilowatts in 2009. During the last five years, total wind turbine exports to China topped 1.14 million kilowatts.

Zhang said American trade officials had repeatedly delayed talks over the issues the Obama administration wants to investigate and called the inquiry pre-election politicking.

"I was very much astonished at it, wondering what the United States wants," Zhang said of the probe. "Do they want fair trade, a normal dialogue or transparent information? ... Judging from the procedures, I believe (politicians of) the United States are more willing to get votes."

Besides the steelworkers union, other foreign manufacturers have said that China provides hidden subsidies such as free land and low-interest loans.

Zhang said that China's clean energy market is open to all foreign players, many of whom have built a presence in the market.

But China had "aggressively" subsidized an industry where only 5 percent of the solar panels manufactured there are actually installed there, said Michael T. Eckhart, president of the American Council on Renewable Energy, the Los Angeles Times reports. "That makes it pretty clear that, by intent or outcome, this is an export industry," he said. "So, China might be found in violation of the rules."

Clean-tech investment in China surpassed funding levels in the United States for the first time last year, says a report from the Pew Charitable Trusts. Those investments in China grew to $34.6 billion, up from $2.5 billion five years ago.