The U.S. led the effort to bring China into the WTO because of their economic power but also supposedly because of their pledge to respect free and open trade.
Apparently 'free and open trade' only applies to the West's end of trade.
Globalization will bring the world together, but for economic warfare ?
Drawing Critics, China Seeks to Dominate in Renewable Energy
BEIJING — When the United States’ top energy and commerce officials arrive in China on Tuesday, they will land in the middle of a building storm over China’s protectionist tactics to become the world’s leader in renewable energy.
Calling renewable energy a strategic industry, China is trying hard to make sure that its companies dominate globally. Just as Japan and South Korea made it hard for Detroit automakers to compete in those countries — giving their own automakers time to amass economies of scale in sheltered domestic markets — China is shielding its clean energy sector while it grows to a point where it can take on the world.
Steven Chu, the American energy secretary, and Gary Locke, the commerce secretary, are coming here to discuss clean energy and global warming with Chinese leaders, and to see if progress can be made toward getting China to agree to specific targets for reductions in greenhouse gases. Agreement proved elusive during the Group of 8 summit meeting last week in Italy.
But Mr. Chu and Mr. Locke arrive as Western companies, especially Europeans, are complaining increasingly about Beijing’s green protectionism.
China has built the world’s largest solar panel manufacturing industry by exporting over 95 percent of its output to the United States and Europe. But when China authorized its first solar power plant this spring, it required that at least 80 percent of the equipment be made in China.
When the Chinese government took bids this spring for 25 large contracts to supply wind turbines, every contract was won by one of seven domestic companies. All six multinationals that submitted bids were disqualified on various technical grounds, like not providing sufficiently detailed data.
This spring, the Chinese government banned virtually any installation of wind turbines with a capacity of less than 1,000 kilowatts — excluding 850-kilowatt designs, a popular size for European manufacturers.
Lu Hong, the program officer for renewable energy in the Beijing office of the Energy Foundation, a nonprofit group seeking to support sustainable energy, said that China was willing to invest heavily in renewable energy industries precisely because it helps the Chinese economy.
“The Chinese government won’t consider such a big solar industry without considering the building up of the domestic industry,” she said, adding that China’s policies will also help address global warming.
Zhou Heliang, the president of the China Electrotechnical Society, a government entity that plays a broad role in national and provincial technology policy, predicted at the Wind Power Asia conference here on Friday that Chinese-owned companies would increase their share of the Chinese market by an additional 10 or 20 percentage points this year.
That would give them almost three-quarters of the domestic market, compared with a quarter for European and American companies — the reverse of the ratio four years ago.
This year, China passed the United States as the world’s largest market for wind energy. It is now building six wind farms with a capacity of 10,000 to 20,000 megawatts apiece, using extensive low-interest loans from state-owned banks.
By comparison, T. Boone Pickens delayed his plans to build a 4,000-megawatt wind farm in Texas, once promoted as the world’s largest.
Some foreign companies, particularly European businesses, are starting to express misgivings about China’s promotion of the local manufacturers.
European wind turbine makers have stopped even bidding for some Chinese contracts after concluding that their bids would not be seriously considered, said Jörg Wuttke, the president of the European Union Chamber of Commerce in China.
European turbine manufacturers are especially disappointed because they built factories in China in order to comply with the country’s requirement that turbines contain 70 percent local content, Mr. Wuttke said. Yet all the multinational manufacturers were disqualified on technical grounds within three days of bidding for wind farm contracts this spring, even as Chinese companies that had never built a turbine were approved, he said.
European solar power companies are also unhappy. “This is not a level playing field,” said Boris Klebensberger, the chief operating officer of SolarWorld AG, which is based in Bonn.
Mr. Wuttke said he was encouraged that Premier Wen Jiabao of China told Chancellor Angela Merkel of Germany in a telephone call on June 25 that China would not discriminate against foreign enterprises, according to the official Xinhua news agency.
But no new Chinese renewable energy regulations have been issued since then on local content requirements or other rules.
American companies play a smaller role in the global renewable energy industry, but some of them are also growing exasperated with the Chinese market. “That has been a tough market for non-Chinese manufacturers,” said Victor Abate, General Electric’s vice president for wind energy.
Kevin Griffis, a Commerce Department spokesman, said that the agency had not heard from American companies about difficulties in the Chinese market for renewable energy.
“Generally speaking,” Mr. Griffis said, “we support a business environment that is open, transparent, and fair so that all companies are able to compete based on product performance, not country of origin.”
World Trade Organization rules ban countries from using local content requirements to force companies like the wind turbine manufacturers to set up factories in a country instead of exporting to it. But much of China’s power industry, although publicly traded, is majority owned by the government.
While China promised to sign the W.T.O. side agreement on government procurement “as soon as possible” when it joined the free trade group in 2001 and won low-tariff access to foreign markets, it has never actually signed the side agreement. So its huge state sector remains largely exempt from international trade rules.
Other rules are also making it hard for foreign manufacturers and investors to compete in China.
China’s renewable energy standard requires that renewable energy account for at least 3 percent of the generating capacity of each large power company, excluding hydroelectric power, by the end of next year. But the rules do not dictate how much electricity must actually be generated from that capacity.
So power companies have an incentive to buy the cheapest wind turbines available, so as to increase their renewable energy capacity — even if the turbines break down frequently and do not produce that much electricity.
Turbines from Chinese-owned companies tend to have slightly lower purchase prices than foreign-brand turbines, but have higher repair costs, so the life cycle costs are similar, according to Chinese experts. United Nations data from the trading of carbon credits shows that the Chinese-brand turbines produce less electricity because they are more frequently out of action.
Financial regulations for wind farms also make it harder for foreign-owned farms than domestic-owned farms to borrow money or to sell carbon credits. Even well-connected international funds like Nature Elements Capital have to look hard for projects, while less-connected funds have struggled to find any at all.
Mr. Zhou said that China was also working hard to develop its own capability to manufacture high-tech materials that can withstand the torque, humidity and other stresses that affect wind turbines.
Two American companies are leading suppliers of materials: PPG Industries of Pittsburgh, the leading maker of fiberglass and protective coatings for the wind turbine housings and blades, and the Zoltek Corporation of Bridgeton, Mo., the world’s dominant supplier of carbon fiber for the support struts inside the most high-tech blades.
A report last month by IHS, a global data company, concluded that Chinese wind turbine makers would soon start exporting. That is because Chinese wind farm installations could level off temporarily as the power grid struggles to install enough high-power lines to use all the electricity wind produces.Asked whether European turbine manufacturers risked sharing Detroit’s overconfidence in the 1970s in the face of challenges from Japan, Mr. Wuttke said that European makers believed that their reputations for quality and reliability would protect them.