September 8, 2010
On Clean Energy, China Skirts Rules
CHANGSHA, China — Until very recently, Hunan Province was known mainly for lip-searing spicy food,
smoggy cities and destitute pig farmers. Mao was born in a village on the outskirts of Changsha, the
provincial capital here in south-central
Now, Changsha and two adjacent cities are emerging as a center of clean energy manufacturing. They are
churning out solar panels for the American and European markets, developing new equipment to
manufacture the panels and branching into turbines that generate electricity from wind. By contrast, clean
energy companies in the United States and Europe are struggling. Some have started cutting jobs and
moving operations to China in ventures with local partners.
The booming Chinese clean energy sector, now more than a million jobs strong, is quickly coming to
dominate the production of technologies essential to slowing
and other forms of air
pollution. Such technologies are needed to assure adequate energy as the world’s population grows by
nearly a third, to nine billion people by the middle of the century, while oil and coal reserves dwindle.
But much of China’s clean energy success lies in aggressive government policies that help this crucial
export industry in ways most other governments do not. These measures risk breaking international rules to
which China and almost all other nations subscribe, according to some trade experts interviewed by The
New York Times.
A visit to one of Changsha’s newest success stories offers an example of the government’s methods. Hunan
Sunzone Optoelectronics, a two-year-old company, makes solar panels and ships close to 95 percent of
them to Europe. Now it is opening sales offices in New York, Chicago and Los Angeles in preparation for a
push into the American market next February.
To help Sunzone, the municipal government transferred to the company 22 acres of valuable urban land
close to downtown at a bargain-basement price. That reduced the company’s costs and greatly increased its
worth and attractiveness to investors.
Meanwhile, a state bank is preparing to lend to the company at a low interest rate, and the provincial
government is sweetening the deal by reimbursing the company for most of the interest payments, to help
Sunzone double its production capacity.
Heavily subsidized land and loans for an exporter like Sunzone are the rule, not the exception, for clean
energy businesses in Changsha and across China, Chinese executives said in interviews over the last three
But this kind of help violates
World Trade Organization
rules banning virtually all subsidies to exporters,
and could be successfully challenged at the agency’s tribunals in Geneva, said
was the United States trade representative during the second Clinton administration and negotiated the
terms of China’s entry to the organization in 2001.
If the country with the subsidies fails to remove them, other countries can retaliate by imposing steep tariffs