(Li Junfeng CFP)
The United Steelworkers (USW) union recently filed a comprehensive trade case under Section 301 of U.S. trade laws. The petition alleges illegal activities by China in five key areas, including restricting access to critical materials, prohibiting export subsidies, domestic content subsidies and trade distorting domestic subsidies. The United States Trade Representative announced a probe into Chinese policies and practices in the renewable energy sector. After a Section 301 investigation is initiated, the case can be settled through bilateral negotiation or through the World Trade Organization.
On November 4, Li Junfeng, Deputy Director of the Energy Research Institute of the China National Development and Reform Commission, shared his thoughts about the trade disputes with Beijing Review reporter Wang Hairong. Li is also Secretary General of the China Renewable Energy Industries Association.
Beijing Review: The USW union filed a Section 301 with the U.S. Government, petitioning for investigation into China's green energy policy. How do you view the case?
Li Junfeng: There are underlying reasons prompting the United Steelworkers to file the petition. First is the sluggish U.S. economy. The unemployment rate is high, and some workers' interests are adversely affected. The union represents the workers. This is understandable.
The Obama administration has been busy addressing the economic crisis. The government has been preoccupied with medical insurance and financial sector reforms. There has been no significant improvement in the economy. The result of the recent midterm election in the United States demonstrates the American people are not satisfied with some of the work done by the government. The dissatisfaction is partly vented upon the Chinese Government, and partly vented upon the U.S. Government.
CATCH THE WIND: A wind power generation project in Hexigten Banner, Inner Mongolia Autonomous Region. In 2009, total installed wind capacity in the region exceeded 5 million kw, the highest in China (ZHANG LING)
Both the Chinese and U.S. Governments subsidize clean technologies. What is the difference between the subsidies?
Both countries subsidize clean technologies. China has learned many policies and practices from the United States. The U.S. Energy Foundation has sponsored Chinese Government officials to study American energy policies. Currently, China is still in the learning stage. The policies of the two countries do not differ significantly. The case is not only that China has subsidized the sector, the United States has not.
The clean energy sector in the United States has not developed as fast as that of China recently. The United States used to be the world leader in solar photovoltaic (PV) production and deployment. It was first overtaken by Germany, then by Japan and now by China. That is because the political system in the United States has caused discontinuity in its policy. Different government administrations may have different policies. Now after the midterm election in the congress, the Obama administration may face more obstacles in its clean energy policy. In this aspect, the two countries are not comparable.
The Obama administration's stimulus package included more than $5 billion for clean energy, while the Chinese Government's financial support is smaller, and most of the funds have not reached the clean energy sector.
We hope the trade disputes will disappear. Clean energy is a fledgling industry, and needs support. Countries across the world all subsidize it.
Are foreign firms in China discriminated against while bidding for clean energy projects in China? An American study shows that foreign firms' share in China's wind power market has shrunk, yet their sales volume has increased. What do you think of that?
There is no discrimination in the bidding process. It is price competition. Bids for wind power concession projects are evaluated according to a price score and a technology score. Usually foreign firms do well in the technology score, but not in the price score. If they fail to win a bid, that is probably because their prices are too high. I have not seen any bid-securing declaration that favors Chinese domestic producers.
U.S. companies have a fairly large market share in China's wind power market. For instance, General Electric (GE), a top wind turbine producer in the world, has sold a large number of wind turbines in China. The Chinese market is GE's largest overseas market.
China's clean energy market is expanding, especially in wind power generation. In 2005, the installed wind capacity in China was only a little more than 1 million kilowatts (kw), now it exceeds 30 million kw.
The U.S. market has also grown very fast in recent years. GE focused on the U.S. market rather than the Chinese market because the U.S. market is very good.