US probe into China's green energy will backfire, says China

The US may have shot itself in the foot after investigating claims that China illegally subsidises its own green-energy sector.

According to a Chinese official, its investigations will now force Washington to reveal its own support for US firms.

The US announced on Friday that it would pursue an investigation into China’s green technology sector, following a petition from the United Steelworkers union.

The steelworkers alleged that China was violating its commitments to the World Trade Organisation with “policies that protect and unfairly support its domestic producers of wind and solar energy products, advanced batteries and energy-efficient vehicles . . . as China seeks to become the dominant global supplier of these products.”

However, China has today hit back – with National Energy Bureau head Zhang Guobao accusing Washington of doing the same thing and pouring billions into its green-energy sector.

“Chinese subsidies to new energies companies are very small,” Zhang said in a statement reported by the Taipei Times.

“But the United States had subsidised the new energy enterprises with US$4.6 billion in cash in the first nine months of 2010, including US$3 billion to wind power enterprises,” he said.

Zhang reckons the US subsidises up to 2,300 energy-related programs, including clean-energy projects.

He also claimed the investigations were political and played to a domestic audience as the US heads to the polls next month for midterm elections.

“Judging from the procedures, I believe [politicians of] the United States are more willing to get votes,” he added.

Figures released on Thursday fuelled US concerns about the trade imbalances with China. The Commerce Department reported the US trade deficit with China ballooned to a new record in August.

The politically sensitive gap with China expanded eight percent, to US$28 billion, surpassing the previous record of US$27.9 billion in October 2008.

The steelworkers, who raised the petition on green technologies, are a key Democratic support group and have posted several other trade petitions against China. One recent case concerned China’s alleged dumping of carbon alloy and steel pipes, in which the US International Trade Commission ruled in favour of the union on Friday.