The US attack on Chinese clean energy subsidies leaves something to be desired
Oct 18, 2010

The US attack on Chinese clean energy subsidies leaves something to be desired

In the latest trade spat, the US has blasted China for its clean energy subsidies which was given a surprisingly clear "bugger off" by Chinese standards of noncommittal diplomacy. There are several interesting issues and hypocrisies at work here.

Firstly, the US heavily subsidizes green tech as do many countries around the world. To accuse China of doing something they more or less do themselves is somewhat hypocritical. The difference is that most western subsidization is on either the R&D side or the supply side (subsidies for green energy into local energy markets) whereas the Chinese subsidization is on the manufacturing aide of things. The Americans naturally are worried about losing even more green energy production to Chinese producers.


More importantly, it really represents a certain tone deafness of the Obama administration on clean energy issues. Despite a staple plank of his election platform, green energy has all but fallen off the stage in the last two years with outside of sole limited stimulus associated investment has seen next to zero movement since Obama came to office. To then attack the Chinese for investing in green energy subsidies while the US makes limited progress in jump-starting its own green energy sector seems reactionary at best. If the worry - and it is a legitimate one - is that the Chinese might out compete America and this market then the solution is not to complain about Chinese help to its companies but to pass comprehensive and meaningful green energy investment bills of their own.

This issue can also be seem in the larger picture of American protectionism in response to the Chinese economic ascendance. As the Chinese become increasingly competitive or even dominant in industry after industry, the American response is consistently to create protectionist policies domestically and raise trade issues abroad. The "Buy American" clauses in the stimulus bills are prime examples of such protectionism.  Protectionism, however, is at best a temporary solution to a longer term problem of dwindling economic power. We should focus on revitalizing US industry for its own sake and not rely on attempts to isolate the US from outside competition.

This shift towards protectionism is not just a matter of an economic policy, it is also a political maneuver. The administration needs a foreign entity to blame for problems. Under the Bush administration that entity was largely islamic fundamentalism and this was precipitated by the very real 9/11 attacks. For Obama the equivalent of the 9/11 attacks are the economic recession. The needs for an external party to blame remains, and China is the logical external party because there are legitimate ways in which it affects the US economy. The problem is a gap between rhetoric and reality as seen in this specific issue, where election season anti-china rhetoric rises as a scapegoat for the US's problems which, despite chinese influence, are largely of its own making.

http://www.nytimes.com/2010/10/16/business/16wind.html

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