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Beijing (AFP) Oct 18, 2010 A US probe into claims China illegally subsidises its green-energy sector will backfire as Washington will be forced to reveal its own support for American firms, a senior Chinese official warned. The US alleges that China funnels huge subsidies to its green technology sector in a bid to dominate the fast-growing market, opening a new front in a wide-ranging tussle over trade between the two giant economies. In the strongest response from Beijing since US authorities announced their investigation on Friday, Zhang Guobao, head of the National Energy Bureau, accused Washington of ploughing billions into its green sector. "Chinese subsidies to new energies companies are very small," Zhang said in a statement reported by state media on Monday. "But the United States had subsidised the new energy enterprises with 4.6 billion US dollars in cash in the first nine months of 2010, including three billion to wind power enterprises." The statement said the US subsidises up to 2,300 energy-related programmes, including clean-energy projects. Zhang speculated that the US probe was called to play to a domestic audience as America heads to the polls next month for midterm elections. "I was very much astonished at it, wondering what the United States wants. Do they want fair trade, a normal dialogue or transparent information?" he said. "Judging from the procedures, I believe (politicians of) the United States are more willing to get votes," Zhang said. The investigation was sparked after the United Steelworkers union -- one of the nation's largest -- petitioned trade officials to probe Chinese practices it claims contravene World Trade Organization rules. It also accused China of providing more than 216 billion dollars' worth of subsidies to green technology makers -- more than twice as much as the US spent in the sector and nearly half of the total 'green' stimulus spent worldwide, according to the union. The claims have received strong backing from members of Congress including House speaker Nancy Pelosi. "While both China and the US must continue to work toward a clean energy future, it is long past due for the Chinese government to play by the rules," she said last week. Figures released on Thursday fueled US concerns about 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 28.0 billion dollars, wiping out the previous record of 27.9 billion dollars set in October 2008.
earlier related report The statement from the commerce ministry followed an announcement Friday by US trade authorities that a probe had been launched into claims China is handing out huge illegal subsidies in a bid to dominate the sector. The United Steelworkers union had petitioned US trade officials to investigate practices it claims contravene World Trade Organization (WTO) rules and cost American jobs. "The union's complaint is groundless and irresponsible," China's commerce ministry said Saturday in a statement posted on its website. The US union -- one of the nation's largest -- accused China of blocking access to materials used in green technologies, illegally linking subsidies to export sales, curbing imports and demanding that foreign investors hand over technology secrets. It also accused China of providing more than 216 billion dollars' worth of subsidies to green technology makers. It said these amounted to "more than twice as much as the US spent in the sector and nearly half of the total 'green' stimulus spent worldwide," according to a September plea filed by the union. Announcing the investigation, US Trade Representative Ron Kirk vowed to tackle all of the complaints in detail. "We take the USW's claims very seriously, and we are vigorously investigating them," he said. The Chinese statement accused the United States of subsidising up to 2,300 energy-related programmes, including clean-energy projects, making the US criticisms of China "unjustified". Trade tensions have dogged China and the United States over the past year, particularly allegations that China keeps its yuan currency artificially weak to boost its export competitiveness. Figures released on Thursday have further fuelled US concerns about trade imbalances with China. The US Commerce Department said the country's trade deficit with China ballooned to a new record in August. The politically sensitive gap with China expanded eight percent, to 28.0 billion dollars, wiping out the previous record of 27.9 billion dollars set in October 2008.
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