China tried to defuse a trade row with the US over wind technology on Thursday, as bilateral rivalries threatened to dash global hopes for green energy cooperation.
Officials in Beijing said they were willing to discuss incentives for turbine manufacturers, which US President Barack Obama’s administration described as “illegal subsidies” in a request for talks on the subject at the WTO.
The US claims China has given an unfair advantage to domestic firms by channeling hundreds of millions of dollars to them through a special fund established in 2008.
The United Steelworkers union (USW) is frustrated that this weakens the competitiveness of US firms such as General Electric in a Chinese market that has doubled in size almost every year since 2005 and is now the biggest in the world in terms of generating capacity.
Obama is expected to raise the issue at a summit in Washington next month with his Chinese counterpart, Hu Jintao (胡錦濤).
Beijing insists its wind policies are good for the global environment and within global trade rules, but its initial response on Thursday was conciliatory.
“China will conscientiously study the US request for consultations, and will deal with this in accordance with WTO dispute settlement rules,” the Chinese Commerce Ministry said in a statement on its Web site.
However, government advisers were scathing. Pan Jiahua (潘家華), the executive director of the sustainable development research center at the Chinese Academy of Social Sciences said the symbolic impact would be significant.
“At a global level, the US action is terrible. It’s very silly,” Pan said. “This gives a very bad signal for the world. It says renewable energy technologies should not be encouraged. This is a huge blow to the fast deployment of wind energy.”
Beijing has pledged to boost wind power capacity from 20 gigawatts last year to 90 gigawatts, and foreign firms — which currently provide less than one in four wind turbines in China — want a bigger share of the business.
With renewable energy set to become more lucrative, other rows are likely to break out. The USW has also urged Washington to oppose Chinese restrictions on antimony, tungsten and other rare earth minerals essential for solar cells, energy-efficient lighting and electric cars.