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US / China WTO wind subsidies spat: a resolution? Probably Not.
 

June 8, 2011

It appears from this article that China will be ending subsidies for its wind turbine manufacturers. An excerpt:

U.S. Trade Representative Ron Kirk announced on June 7 that China has ended certain wind power equipment subsidies. The United States had challenged the Special Fund for Wind Power Equipment Manufacturing (Special Fund) subsidies at the World Trade Organization (WTO) following an investigation initiated in response to a petition filed by the United Steelworkers (USW). The subsidies took the form of grants to Chinese wind turbine manufacturers that agreed to use key parts and components made in China rather than purchasing imports.

A lot of people will view this in a win/lose manner, which is shallow and unhelpful. A wind turbine is a complex system comprising many different components. These include the blades, guidance system, converter, gearbox, bearings – all of which are already produced in China by foreign companies who are doing pretty well. As I argue in the March edition of Renewable Energy Focus, this will help some companies like GE and Gamesa and hurt others like AMSC and Siemens.

Has the barn door been shut too late? China’s rate of wind turbine installation is slowing, and in talking to our client in power products, fewer projects are on the horizon for either foreign or Chinese companies. The Big Five, who buy turbines, are bleeding in the face of higher coal prices and the NDRC has “warned power-station coal producers against price increases, threatening fines of as much as five times the revenue generated.” Coupled with expensive upgrade requirements demanded by the government, this slowing of growth means that wind farm operators won’t be buying much this summer.

 

About GCiS China Strategic Research

GCiS (www.GCiS.com.cn) is a China-based market research and advisory firm focused on business to business markets. Since 1997, GCiS has been working with leading multinationals in sectors ranging from technology to industrial markets, medical, chemicals, resources, building and constructions and a few others.

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