U.S. to launch inquiry into China's subsidies for clean-energy firms

By Howard Schneider
Washington Post Staff Writer
Saturday, October 16, 2010

The Obama administration is launching a broad investigation into whether the Chinese government improperly supports its alternative energy companies, one of the sharpest challenges yet to Beijing's alleged efforts to seize world leadership in particular industries.

U.S. Trade Representative Ron Kirk announced on Friday he had accepted a petition from the United Steelworkers union contending that the subsidies and other benefits China grants to its clean-energy companies violate World Trade Organization rules.

"We take the USW's claims very seriously, and we are vigorously investigating them," Kirk said in a prepared release. "Green technology will be an engine for the jobs of the future, and this administration is committed to ensuring a level playing field for American workers."

The administration has 90 days to research the union's claims and decide whether to advance the case with a formal complaint to the WTO.

Persistent unemployment in the United States and a renewed focus on boosting U.S. exports have led to rising trade tensions with China, which enjoys a massive trade surplus with the United States. The Chinese Communist Party Central Committee on Friday began its annual meeting to discuss the future of the nation's economy over the next five years.

Treasury Secretary Timothy F. Geithner has escalated complaints about the country's management of its currency and has said Beijing's efforts to keep the yuan cheap on world markets distort global trade patterns.

On Friday, Geithner delayed publication of a semiannual survey of world currency practices, noting that the Chinese had recently allowed their currency to rise more quickly in value, at a rate of about 1 percent a month, which he found encouraging "if sustained over time." At the same time, he has been pushing the International Monetary Fund and the Group of 20 major economic powers to press China toward a more flexible exchange rate.

The investigation of the United Steelworkers petition marks another front in that struggle - and one that examines some of China's core economic policies. In recent months, U.S. and European businesses have stepped up criticism of China for demanding that Western companies transfer technology as a condition of doing business in the country, and for instituting policies requiring government agencies to buy more locally made technology products.

The underlying aim is to move China from its reliance on low-end manufacturing to higher-end products and technologies. But the United States and other countries charge that the rules violate international standards on the protection of intellectual property and flout free-trade commitments China made when it joined the WTO.

In the case of alternative energy, United Steelworkers contends that China has seized a large share of the global market for products such as solar panels by subsidizing the companies that make them. Other policies, such as limits on the export of rare-earth elements used in many high-tech products, are seen as an effort to undermine the ability of foreign companies to compete.

The Obama administration has focused on the green and alternative energy sector as an area where the United States can develop a technological edge that will create new manufacturing jobs.

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