The clean energy game US plays
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Economic relations between China and the United States have been somewhat strained over the past several months because of disputes over several issues. Tension escalated recently when the Barack Obama administration said it would investigate into subsidies granted by the Chinese government to its clean energy industries.
Accusing China of granting subsidies to its clean energy sector is another politicized economic move by the US for which the midterm election (held on Tuesday) was the main motive. The US economy has recovered very slowly over the past two years, tilting the scales against the ruling Democratic Party in the midterm election. The Democrats needed somebody to blame for the economic mess in the US, and China became the scapegoat yet again.
For many years, US elections have seen the Democrats and Republicans both play the "China card" to win voters. This time China has been targeted for something as benign as granting subsidies to its clean energy sector.
In its complaint, the US blames China for introducing new measures against foreign companies in the clean energy market and claims that it would make them unable to compete with their Chinese counterparts fairly. But this accusation is irrational.
As is universally acknowledged, the clean energy sector in China is in its infancy. Traditionally, all countries try to protect their nascent and vulnerable industries. The US has taken (and still takes) many such measures, offering much stronger support to its industries. Even in the first three quarters of this year, the US gave $4.6 billion in subsidies to its clean energy industry in cash. In contrast, no clean energy enterprise in China has received any direct subsidy. So, how can the US blame China for implementing something that it itself has been doing for such a long time?
Besides, the US blames China for "discriminating" against foreign companies. The truth is China has never done any such thing. During the past seven years, China has called many bids for its wind power projects. Foreign companies won some of them initially but couldn't do so after 2005, and their market share dropped from 70 percent in 2005 to 13 percent last year. But the reason for that is not any discriminatory measure but foreign companies' high labor cost, which counterbalances their technological advantages.
