China rejects US WTO complaint over unfair clean energy subsidies

December 24, 2010
Urumqui wind turbines
Just weeks before President Hu Jintao's January visit to the United States, the US government said Wednesday it had asked the World Trade Organization (WTO) to deal with allegedly illegal subsidies that favor Chinese manufacturing firms.

The United States alleges China offers multi-million-dollar grants to only companies making turbines and other equipment with Chinese parts, a violation of trade rules. China's Ministry of Commerce for its part has rejected allegations that its support for wind turbine manufacturers breaches trade rules, in response to the Obama Administration's complaint.

In a statement on its web site the ministry said it would study the US request for talks and seek to resolve the dispute in line with WTO rules. However, it categorically rejected US allegations that rules requiring wind turbine manufacturers to use parts made in China violate trade rules.

"China is highly concerned about the US raising the case to the WTO... China will carefully study the discussion request," the Commerce Ministry said in its statement. "China's relevant measures to develop wind power are conducive to energy saving, emission reduction and environment protection. They are important approaches to realizing sustainable development and comply with WTO rules.

"Every country in the world is seeking to develop renewable energy to cope with climate change. China's wind power measures are helping save energy and protect the environment. This is crucial for sustainable development and is in accord with WTO principles," the statement said.

In talks between the two countries earlier this week China agreed to relax rules requiring foreign wind energy firms to have experience in the Chinese market before bidding for supply deals.

In a statement, US trade representative Ron Kirk insisted the US had a strong case. "Import substitution subsidies are particularly harmful and inherently trade distorting, which is why they are expressly prohibited under WTO rules," he said. "These subsidies effectively operate as a barrier to US exports to China."

The US investigation was sparked earlier this year when the United Steelworkers filed a 5,800-page petition with the US government calling on it to investigate alleged Chinese protectionism designed to support its fast-expanding clean technology sector.

The US Trade Department has chosen to focus on the narrow issue of rules governing wind energy projects, although it has hinted that it could expand the investigation to look at other areas.

US President Obama is expected to press his Chinese counterpart to open the door to more US imports when the two leaders meet in January, a means of bolstering the US recovery and re-balancing global trade flows, which are seen as unfairly favoring Beijing.

"These subsidies effectively operate as a barrier to US exports to China," said US Trade Representative Ron Kirk, vowing Washington was committed to "ensuring a level playing field."

The US alleges that the grants, said to be worth as much as USD 22.5 million, are part of a vast Chinese effort to become a world-beater in green technology. Despite heavy US spending to improve its own green energy sector, it is still seen as lagging the emerging giant.