The US has fired its latest salvo against Chinese manipulation of export prices. The US accuses China of subsidizing production wind power equipment and has approached the World Trade Organization (WTO) for talks.
Terming the subsidies as illegal, the US says China has given millions of dollars to wind power equipment manufacturers as grants – thus keeping the production cost low artificially and disadvantaging US exporters.
China has a long history of price manipulation, including keeping its currency low artificially. In 2008, the Chinese government had set up ‘Special Fund for Wind Power Manufacturing’, ostensibly to favour local manufacturers.
US wind electricity generator manufacturers like General Electric and United Technologies are unable to compete in the Chinese market – which is seen by many as potentially the largest wind energy market in the world.
In a statement issued by the Trade secretary of the US Government, Ron Kirk said: “Import substitution subsidies are particularly harmful and inherently trade distorting, which is why they are expressly prohibited under WTO rules”.
The current dispute follows a previous filing in September when the United Steel Works (USW) had protested against a list of Chinese steel manufacturers getting state subsidies or some other form of trade distorting state protections.
It also included China disrupting the supply of Rare Earth minerals, a key component for manufacturing electric vehicles, wind turbines, energy efficient lighting and solar cells. China has the world’s highest reserve of Rare Earth deposits and controls 90% of global supplies.
Trade and commerce spokeswoman Nefeterius McPherson said the USA is “very concerned about China’s export restraints on rare earth materials, antimony and tungsten” and may file a case with the WTO.
Recently, China showed some initiative to open up its wind turbine market to other countries. Foreign manufacturers no longer require experience of domestic operations for large project biddings.