Kate Mackenzie Wind power: Free trading China, mercantilist US?

China has softened its approach to foreign companies seeking government supply contracts, the FT reports, signalling that they will be able to apply for accreditation under “indigenous innovation” rules. The rules are blamed for a big fall in China’s buying of foreign wind turbines – particularly those made by US companies.

But will this affect the ‘buy American’ campaign, which is particularly targeting the wind industry? Bloomberg on Tuesday quoted a policy analyst predicting that ‘buy American’ provisions would be tacked onto the climate bill that is expected to be introduced in the Senate next week:

“Congress is feeling pressure to make sure they won’t be held accountable for green jobs going overseas,” said Kevin Book, a managing director for Clearview Energy Partners LLC, a Washington-based policy research firm.

It may have some political resonance, but the wind industry itself doesn’t want these measures, not least because it wants to take advantage of cheap Chinese manufacturing; and to have the opportunity to sell their own locally-manufactured turbines to China, which is rapidly expanding its installed wind power base. GE for example has made clear it fears retaliation over protectionist US measures.

On the face of it, the new concessions from China seem like a big deal – at least, important enough for the EU Chamber of Commerce in China to give a resounding welcome, adding it had this month already received important assurances that foreign-invested companies in China would receive fair and equitable treatment.

The chamber’s president, Joerg Wuttke, told the FT:

“This is an important sign that policy-makers in China recognise the role that fair competition plays in developing and enhancing China’s high-tech capabilities, and that foreign-invested companies can make a valuable contribution.”

The Information Technology Industry Council, a US technology group, also welcomed the move but was a little more cautious, pointing out “a number of problematic aspects of the policy remain that we hope can be resolved going forward”.

However as the story points out, China has several times in the past decade set out with strong buy-local initiatives, only to back down on them.

Will it be the same in the US? It seems unlikely, with all the existing political torpor over the climate bill, that it would escape any populist add-on, regardless of the longer-term impact on the industry. And not everyone is happy about subsidies for US wind farms anyway – step forward, natural gas.

Related links:

GE says barriers harming green job creation - FT
Green stimulus and the dangers of buy American - FT Energy Source
Has the White House painted itself into a corner over the climate bill? - FT Energy Source
Teaming up with China on clean tech – FT Energy Source
Obama and Hu stress cooperation - FT