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Pointing the finger the wrong way

America’s largest union has persuaded Obama to investigate China’s cleantech subsidies – a protectionist move that will only hinder green progress and foster climate scepticism, writes Dale Jiajun Wen.

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On September 9, the biggest union in the United States, United Steelworkers, filed a 5,800-page petition under Section 301 of the Trade Act of 1974, alleging that the Chinese government has violated international trade laws by providing hundreds of billions of dollars in illegal subsidies to its green-technology producers and exporters.

The organisation asked the US government to initiate an investigation and bring this case before the World Trade Organisation (WTO) – and on Friday last week (15 October), Barack Obama’s administration obliged, announcing the launch of a probe into the complaints.

A US union complaining that China is not joining the race to the bottom? This sounds shocking. It is true that China is investing more in renewable energy than the United States. According to a report by US-based non-profit The Pew Charitable Trusts, in 2009 China ploughed US$34.6 billion (231 billion yuan) into clean energy, while the United States only invested US$18.6 billion (124 billion yuan), 0.39% and 0.13% of their GDPs respectively. But isn't significant investment in fossil-fuel alternatives what every country needs to do in order to reduce greenhouse-gas emission as well as to generate green jobs? In this regard, Spain, which pumped 0.74% of GDP into clean energy in 2009, and the United Kingdom (0.51%) are also in the front ranks.

On September 22, a panel of experts including those from United Steelworkers and BlueGreen Alliance (a labour-environment alliance initiated by United Steelworkers and the Sierra Club) gave a joint briefing in Washington DC entitled “Leveling the Playing Field – Clean Energy Subsidies in China: A Briefing on the United Steelworkers’ Section 301 Petition”. One cannot resist asking: do we truly need such a “level playing field”, where everybody talks about the necessity for renewables and low-carbon development, but doesn’t act on it? Why can’t United Steelworkers ask the Obama administration to support green jobs with real deeds instead of empty words? Instead, they attack China for doing the right thing, the thing the US government should itself be doing.

To give it fair credit, the BlueGreen Alliance is still trying to spin the petition to highlight the need for domestic action. In a September 9 press release, the organisation stated: “Today's Section 301 petition filed by the United Steelworkers underscores the importance that the United States act quickly to take advantage of the job-creating opportunities of the clean energy economy. Every day America delays action is another day that China capitalises on jobs created in the production of clean energy technologies that could and should be developed, manufactured and installed in the United States.”

Unfortunately, this does not change the fact that the 5,800-page petition largely focuses on what is wrong with China instead of discussing what is wrong with US domestic policy. You can guess the outcome – it is almost part of human nature that if a problem can be framed as “somebody else’s” (in this case, China’s) then people lose the incentive to search for solutions at home. The real problem here is quite obvious: lack of ambition and coherent national policy in the United States.

Discussing this issue, a German friend commented: “There are people who prefer installing wind turbines or making solar panels, there are people who prefer pushing papers. The problem with America is that, in this land of lawyers, more and more people prefer pushing papers. What hope exists for the US manufacturing industry if even the labour unions prefer pushing papers with their 5,800-page petition instead of installing wind turbines?” A 2009 report in the Guardian newspaper indicated some potential for positive change, with blue-collar workers pushing for green jobs, but the potential has not yet been realised. And, for many observers, the hope is dashed by this lengthy document of finger-pointing.

To be honest, China's rapid expansion of renewables, especially the solar industry, does have problems. Despite the recent increase in subsidies to domestic users of PV panels, more than 90% of Chinese-made solar panels still go to overseas markets, largely because solar electricity is so much more expensive than energy from conventional sources. Given the high energy cost of PV-panel manufacturing and related pollution, some Chinese experts are questioning the green credentials of the PV industry, or even suggesting it is nothing but a new, low-end manufacturing sector for China.

Obviously, the Chinese government needs to fine tune its renewable policy to address these concerns. But on the global scale, China is certainly moving in the right direction. A 2009 UNDESA report called for a global green new deal to mobilise substantial public resources – in the order of US$500 to US$600 billion (3.3 trillion yuan to 4 trillion yuan) a year – to tackle energy poverty, while over the next 10 to 15 years driving the price of renewable energy down to levels where it can compete with fossil fuels and be affordable for the global poor.

We should be glad that China is doing its bit with its serious commitment to renewables. It is probably not enough against the backdrop of the colossal challenge of climate change, but it certainly shines in comparison to the inaction of the United States. What an irony that a US union is seeking to penalise China for doing it.

In order to slow down and eventually reverse dangerous climate change, we need a positive competition, a race to the top and a race to the future, which in this case means that, instead of finger pointing, US workers need to ask their own government to at least match China's support for renewables. Given that the United States is the richest country in the world, it should do much more. In the light of the bailout and huge subsidies the US government lavished on the banking industry, the manufacturing workers are justified in complaining and lobbying for more support. They deserve sympathy in this regard, but their chosen target of the complaint is utterly misguided.

A friend from the United States commented that China is in an impossible position: “Either (the Chinese) don’t take action on climate and we slap a BTA [border tax adjustment] on your imports, or take action and we challenge your support of green tech.” She is right on the mark. The number of Chinese climate sceptics has grown since Copenhagen, largely as response to unreasonable China-bashing on the issue. One scary yet common response to Mark Lynas's widely distributed article blaming China for the summit’s failure was, “Let's unite with the US right wing to destroy the stupid European climate agenda.” Needless to say, this knee-jerk response is wrong in many respects, but that does not change the sad fact that Mark Lynas's article has probably done more to discredit the climate issue among the Chinese population than all the western sceptics combined.

I have been in China for the last month, spending many hours talking to sceptics. I described the negative impacts of climate change on agriculture and rural livelihoods that I have already witnessed in many parts of rural China, trying to convey the message that the science of climate change still stands despite problematic climate politics. Now I am deeply concerned that this new development of US climate protectionism will push people further away. If China is blamed no matter what it does on climate, what better evidence is there to convince people that climate change is merely a western conspiracy to constrain the growth of developing countries?

Many of my Chinese environmentalist friends and I are doing our best to salvage the integrity of the climate agenda. In this context, this petition really feels like a stab in the back. I think it is a challenge for all people who are seriously concerned about climate change and environmental sustainability as a whole: for the last two years, the climate politics has been largely abducted by US internal politics, which seriously and increasingly undermine the integrity of the climate issue. One sceptic already said to me: “This US union blames China for supporting renewables too much. Not surprising. What do your western green friends say about this?”

I will stop here and pass the question to all green friends: what is your answer to this? It is up to every one of us to show with our words and our deeds that the climate issue is a common issue for humankind, and not just an issue for the green lobby, the renewable-energy lobby or any other special interest group.


Dale Jiajun Wen is an associate at the International Forum on Globalization.

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Power, Preferences, and Perceptions

Domestic considerations regarding national policy have always been and will continue to be at the forefront of international policy-making. As such, it should come as no surprise to rational, non-emotional observers of political outcomes that the climate change issue is now morphing into a tool used by a wide number of governments to create more favorable economic conditions. This is true not only of the U.S., which is experiencing double-digit unemployment, but also China, which has its own 'domestic' concerns. But Chinese domestic concerns are extremely different than American ones. American leaders must give all the people (given its large selectorate) a large amount of public goods (like housing, clean environment, education, etc.). The Chinese government stays in power by giving private goods to a smaller number of well-connected people. Giving all the Chinese people clean air and water is too expensive for Chinese leaders, and doesn't improve their political survival. That is why solar panels in China continue to be 'too expensive.' Or why policy written in Beijing is difficult to enforce anywhere else. And hence the reason for skepticism in the US.

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A double-edged wind turbine blade

In the US, it has been said that if we fear Red China now, just wait until we see Green China. Ms. Wen makes a strong argument, and it is frustrating to see America dragging its feet and "pushing paper" instead. As a democrat, Obama needs to keep his political base happy, and that includes the labor unions. If we had instead invested more money into renewable energy technology instead of fossil fuel exploration, the unions might not have had anything to complain about.

Nobody will deny China's ability to quickly scale up renewable energy technologies and deliver them to the world at low cost is a great asset in the global effort to mitigate climate change. On the other hand, it is no secret that China has kept its currency artificially low to keep exports cheap. This may be indirectly leading to stagnation in green technology development around the world. We need to have the technology price competitive with fossil energy, but we also need to have a world where we are all participating in its research and development.

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据国家能源局澄清,我们国家现在对美国提出的要求是调查“应该透明”,不过我很不明白这个要求是怎么回事。另外,还居能源局透露,实际上我们国家出口美国的风力发电机极少,相反是美国出口了不少给我们( 比如GE),我们不用怕。但是美国一个文件长达5800页,想必是对中国方方面面的情况进行了仔细的调查研究吧,自己拿过来看看,也未尝不是件好事。干事总有个目的,这么费劲的事情,不会空穴来风,否则,这么讲究低碳的美国是不会花这么多纸,做这样的是吧!

Commit no shameful act and have no fear of ghosts knocking on your door

According to a clarification by the National Energy Bureau, China is now seeking “transparency” on this demand raised by America - nonetheless though, we really aren’t clear on what exactly this demand is. In addition, also leaked from the Energy Bureau, in reality China exports very few of its wind power generators to America, but conversely, America exports a lot to China (e.g. GE), so we needn’t fear. However, one of America’s documents ran as long as 5,800 pages, and it is presumably investigative research which goes into minute detail about all aspects of China’s situation. When we look at this ourselves, this is not necessarily not a good thing. The administrative chief has an objective , a very tough matter to handle, and it cannot be pulled out of thin air, otherwise low-carbon America would not have used that much paper for this kind of thing!

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American Hypocrisy

The US government has tried to build global trade regulations in favor of the US to try to maintain its standing as the largest economy. When the US is no longer top dog, do they compete or do they sue?

China has quickly industrialized, and the US is scared and not up for the challenge. The US needs to come to terms that they have fallen behind in sustainable energy production, and should make a big push to catch up with China, Germany, Britain, etc. Since the private industries are not investing enough domestically, the federal government needs to be the investor in sustainable technology. China and other countries have done just that, and the US needs to do the same in order to compete. Regardless of whether or not China has violated international trade laws, an investigating of a violation of international trade laws will not help lower greenhouse gas emissions, nor will it help the US improve its sustainable energy sector.

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I concur....

Great article, Dale. I think this points out the hypocrisy of US trade policy and US policy toward climate change more generally.

Those who criticize China’s subsidies are taking a dangerously short-sighted perspective and failing to realize that while individual countries may balk at subsidies, the world as a whole desperately needs them. By subsidizing green technology, China is doing America and the world a huge favor.

Perhaps it is the WTO rule in this case that needs to be rewritten. After all, if we are all underwater in 50 years, who will be left to pore over 5,800 page documents to calculate China’s trade violations?

I wrote more about this here:

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Thanks for writing the essay and raising the criticism. The position taken by the United Steelworkers is both upsetting and disappointing. This is not the first time that big unions play less than progressive roles. It points to an important question of whether mainstream US unions, including the United Steelworkers, have the political will and ability to articulate autonomous working class positions. Robert Fitch's book _Solidarity for Sale_ (2006), which I reviewed for Dushu (“美國勞工運動中的病症--評《出賣團結》”,《读书》2006年11期 ), offers a sharp look inside the union politics (the author himself is a union member).

I don't know whether there has been any critique of the United Steelworkers petition from the left in the US. If there is, it would be good to link up.

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Absolutely shocking hypocrisy from the USA

I am from the UK and absolutely shocked by the immense duplicity by the US and the Obama Administration.

The recent report by the GSI (Global Subsidies Initiative) points out that the subsidies for renewable energy globally are only $27Bn per year.

By comparison, global fossil fuel subsidies were $342Bn USD in 2007 and $557Bn in 2008 according to the International Energy Agency. In addition, subsidies provided to producers were in the order of $100 billion per year; so total fossil fuel subsidies were almost $700 Billion per year, or one percent of global GDP...

This is not to mention the level of historical subsidies that have gone towards fossil fuel, including oil extraction technologies, throughout history.

I bet that most of the steelworkers who started this petition were completely unaware of this fact.

Of course, the steel industry in the US is afraid of being asked to reduce its emissions and has been implicated in lobbying for weaker environmental regulation. It could be argued this is a cynical attempt by the steel industry in the US to subvert the talks on climate change (possible?).

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Let's stop US bashing and look at the whole picture

Is the United Steel Workers accusation and the Obama Administration's support of it hypocritical? Yes. But is the Chinese government’s substantial and exclusive support to its domestic clean energy companies justified? No. China should be encouraging the development of clean energy, but not in a way that gives its companies an unfair competitive advantage on the world stage. Instead, they should be promoting policies like a carbon tax or cap and trade, that would create fair competition between all companies, not just China's highly inefficient State Owned Enterprises. By engaging in clean energy protectionism, China has invited this accusation by the USW.

The US is not the only one that's being hypocritical here. China goes to the UNFCCC negotiations arguing that developing clean energy puts it at an economic disadvantage and that rich countries should basically subsidize its clean development, and then it exclusively supports its own domestic clean energy companies to give it a national strategic and economic advantage in the "next great global industry." At least the US didn't block the Shenyang Power Group from supplying Chinese-made wind turbines to a Texas wind farm.

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American media response

yfl--Your comment is well taken. As an American, here is a short response. Within the professional circle on international, China-focused enterprises that I work in, I couldn't find a single person who supported the petition. They all think it is nonsense and will not be brought to WTO. Others are convinced that trade war is inevitable. There have been a lot of reports in mainstream media about China's response calling the investigation irresponsible.

Almost all comments on major forums are against the petition:

The US attention being forced on to clean energy practices by another government. Frankly, I like this. http://ecocentric.blogs.time.com/2010/10/15/energy-a-clean-tech-trade-war-begins-to-heat-up-with-china/#ixzz149g9cApl

Here is the US again looking for someone else to blame for problems of their own creation. http://thehill.com/blogs/e2-wire/677-e2-wire/124471-white-house-launches-probe-of-chinas-green-trade-practices

There's nothing wrong with China subsidizing it's solar manufacturers for solar products installed within China; the problem occurs when a subsidized Chinese solar company is exporting up to 95% of its product. http://www.huffingtonpost.com