China says wind, solar subsidies WTO compliant

[December 23, 2010]  SHANGHAI (AP) -- China is defending its subsidies for wind and solar power against a U.S. complaint to the World Trade Organization that such support is unfair, saying its policies are best for fighting climate change.

The relatively mild response by China's Commerce Ministry on Thursday to the U.S. move likely reflects Beijing's desire to keep relations on a positive track in the weeks leading up to Chinese President Hu Jintao's state visit to the U.S., which begins Jan. 19.

"Every country in the world is seeking to develop renewable energy to cope with climate change. China's wind power measures are helping save energy and protect the environment," the Commerce Ministry said in a statement.

"This is crucial for sustainable development and is in accord with WTO principles," it said.

The ministry said China attaches "great importance" to WTO dispute settlement procedures and would reserve its "due rights."

News of the case filed against China at the Geneva-based WTO on Wednesday was awkwardly timed, coming on the same day of the White House's announcement of Hu's visit.

But analysts said despite its recent shows of assertiveness over various issues, Beijing would likely downplay the dispute, which will take months to be resolved.

"I don't see it causing any negative impact on President Hu's visit," said Zhu Feng, a professor specializing in China-U.S. relations at the School of International Studies at Peking University.

"In fact, the state visit will serve as a great channel for the Chinese and U.S. leaders to discuss their political and economic interests, including such disputes," Zhu said.

The two countries are at odds over a slew of trade and diplomatic issues. Beijing was outraged earlier this year by a major U.S. arms sale to Taiwan, while Washington has been upfront about its desire to see Beijing do more to rein its longtime ally North Korea.

The U.S. side has persisted, meanwhile, in pushing for faster changes in currency policies that it contends keeps the Chinese yuan undervalued, swelling the chronic U.S. trade deficit with China.

On Thursday, adding to the wide range of products under dispute, the Commerce Ministry announced it was launching an anti-dumping probe of photographic paper imported from the U.S., the European Union and Japan. The investigation was in response to an industry complaint received on Nov. 8, it said.

Despite those differences, in trade talks last week, the two sides agreed on pledges for improved protection of patents and other intellectual property, reforms of technology innovation policies, and increased access for U.S. beef and poultry exports to China.

China also pledged to remove requirements that Washington says discriminate against U.S. firms competing to build large wind power plants.

Beijing has invested heavily in nurturing its renewable energy sector, building wind farms and subsidizing electricity sold by wind power generators. It recently announced new subsidies for the solar power industry.

The government wants at least 15 percent of China's power to come from renewable energy by 2020, viewing such commitments as a way to reduce greenhouse gas emissions and limit the country's dependence on costly imports of oil and gas.

The WTO case was in response to a United Steelworkers petition last September that alleged Chinese companies can sell wind and solar equipment on international markets at cheaper prices than their competitors because they receive subsidies.

The administration's WTO case alleges that those subsidies violate global trade rules. Such subsidies, said U.S. Trade Representative Ron Kirk, are "particularly harmful and inherently trade distorting."

The case will first trigger consultations between the two nations. If they fail to resolve the dispute, the WTO will convene a hearing panel.

If the administration wins the case and China does not give up its subsidies, the United States would be authorized to impose penalty tariffs on Chinese products equal to the lost sales that U.S. energy companies are experiencing.

[Associated Press; By ELAINE KURTENBACH]

Associated Press writer Chris Bodeen and researcher Zhao Liang in Beijing contributed to this report.

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