China has no discriminatory rules on wind energy equipment manufact

"The United States will not win this trade war against China’s new energy sector," said Zhang Guobao, deputy director of China’s National Development and Reform Commission and head of the National Energy Bureau, responding to the United States’ probe into Chinese clean energy policies under section 301 of the U.S. trade law.

Zhang said in an interview with Chinese and foreign media that the wording of the Section 301 petition is ambiguous, and much of the data it uses is incorrect and even deliberately made up.

"The probe will backfire on itself by exposing more of the huge subsidies to its own clean energy sector," he said.

China’s subsidies to its clean energy companies are extremely small, but reliable statistics show that the United States had subsidized its clean energy companies with 4.6 billion U.S. dollars in cash from January to September 2010, including 3 billion U.S. dollars to wind power companies.

Zhang also denied the U.S. allegation that China has unfairly favored Chinese companies over foreign-funded companies in wind farm bids.

"China has no discriminatory rules on wind energy equipment manufacturers," Zhang said.

The spat came as Olli Rehn, EU economic and monetary affairs commissioner, called on Saturday for China to allow its yuan currency to strengthen on a “broad basis” to ease global imbalances.

Mr Rehn said the yuan was “very undervalued” in an interview with Finnish television, adding: “It’s essential that China allows renminbi (yuan) to strengthen in relation to its all trading partners, including the European Union.”

Trade relations had already escalated as President Barack Obama criticised China’s currency policy and the House of Representatives passed legislation targeting imports from China as a way to prod Chinese leaders into raising the value of the yuan.

The US Treasury has also postponed by at least one month a report on whether China is manipulating its currency on unfair trade advantage.

The Treasury said it was delaying its semi-annual report on foreign exchange rate practices until after a pair of international summits in November to give diplomatic pressure on China more time to achieve results.

In a move that is unlikely to ease trade tensions, the US government – at the request of the United Steelworkers Union – is to look into whether Chinese support for its clean energy sector was a violation of World Trade Organisation rules (WTO). Accepting the petition may lead the Obama administration to file a protest at the WTO.

The steelworkers said in their filing to the trade office last month that illegal export credits, preferences in bidding, the forced transfer of technology and discrimination against foreign firms give Chinese producers of renewable-energy products an unfair advantage.

Announcing the decision on Friday, US Trade Representative, Ron Kirk, said: “Green technology will be an engine for the jobs of the future, and this administration is committed to ensuring a level playing field.”

But China said the move sent a wrong signal on trade protectionism. The country’s commerce ministry said in a statement the charges by the union were “groundless and irresponsible” and it regretted that the US government agreed to open investigations.

“The US government’s acceptance of the appeal and its decision to launch a probe into the issue is sending a wrong signal of trade protectionism to the rest of the world,” an unnamed official with the commerce ministry’s division to safeguard fair foreign trade said in a statement on its website.

The official said the United States was also promoting its energy sector and more than 2,300 projects, including those related to clean energy, were eligible for government subsidies.

“As such, the US has no reason to blame other countries’ efforts to improve the well-being of mankind,” they added.

China will protect its rights and interest in accordance with WTO rules, the official said.

Many foreign wind turbines companies had participated in and won bids in China from 2003 to 2005, but the probability of their success in bidding have been dropping ever since 2005. This is mainly because they offer prices much higher than Chinese competitors and prefer to directly seek buyers.

Zhang said that in sharp contrast to China’s open attitude, the American Recovery and Reinvestment Act introduced in 2009 allows the United States to subsidize its renewable energy, energy efficient and smart grid businesses, and the renewable energy industry alone has received a massive subsidy of 25.2 billion U.S. dollars.

Furthermore, the U.S. Office of Energy Efficiency and Renewable Energy introduced a six-month tentative rule on Aug. 16, 2010 that requires subsidized solar power projects to use only U.S-made photovoltaic wafers.

China has exported only three wind turbines to the United States so far with total power-generating capacity of less than 10,000 kW. However, U.S.-based GE exported wind turbines with a total capacity of 80,000 kW to China in 2005. The figure surged to 340,000 kW in 2009, which is an increase of more than 400 percent. Wind turbines exported by GE to China over the past five years have a total capacity of over 1 million kW.

Zhang said that the turnover of China’s wind power generating equipment market reached about 85 billion yuan in 2009, including 21 percent imported from abroad. The figures fully imply that China’s wind power-generating market has created enormous export opportunities for foreign companies.

"I have always held a sincere attitude towards the exchanges with the United States, particularly in the renewable energy and new energy sector, because the energy issue is an issue faced by all human beings," said Zhang. China and the United States should conduct dialogues and exchanges on the topic of new-energy.

It is reported that the China-U.S. new energy video dialogue that was proposed by the United States and scheduled to be held on Oct. 12 was postponed over and over due to reasons attributed to the American side.

"I feel very surprised at it and wonder what the United States is actually attempting to acquire. Are they after fair trade, a normal dialogue or transparent information? Given the entire timeline, I think the American side prefers to gain more votes," said Zhang.

The Office of the United States Trade Representative announced on Oct. 15 (local time) that upon the application from the United Steelworkers, it has initiated the Section 301 Investigation into China’s policies and measures relating to clean energy.

The U.S. Section 301 refers to the full content of the 1301-1310 sections of the "1988 Omnibus Trade and Competition Law," and is mainly aimed at protecting American interests in international trade by punishing the countries that it believes have had irrational and unfair trade practices.