China defends wind power policies

The United States accused China of illegally subsidizing production of wind power equipment and asked for talks at the World Trade Organization, the first step in filing a trade case.

"China will conscientiously study the U.S. request for consultations, and will deal with this in accordance with WTO dispute settlement rules, while retaining our corresponding rights," the Chinese Commerce Ministry said in its first reaction to the U.S. move.

The statement on the Ministry's website said China's wind power policies were "in keeping with WTO rules" and were also good for the environment.

By the midday break, shares in Chinese wind turbine makers and wind power generators that have interests in the United States fell.

China High Speed Transmission Equipment Group was down 1.9 percent, Xinjiang Goldwind Science and Technology fell 0.8 percent and China Longyuan Power Group Corp slipped 2 percent, trailing Hong Kong's benchmark Hang Seng Index, which was up 0.19 percent.

The Ministry's comments were a relatively tempered initial response to the U.S. complaint, which has been made ahead of a January visit to Washington by Chinese President Hu Jintao.

The U.S. Trade Representative says that Chinese manufacturers of wind turbines and components may have received several hundred million dollars in government grants that violate trade rules by requiring Chinese manufacturers to use only Chinese-made parts and components.

U.S. Trade Representative Ron Kirk said in a statement that "import substitution subsidies are particularly harmful and inherently trade distorting," noting that they were operating as a barrier to U.S. exports to China.

By asking for WTO talks, the U.S. begins a 60-day period for the two countries to resolve the disagreement through consultation. If those efforts fail, the U.S. could ask for a WTO dispute settlement panel to hear its complaint.

China has said its new five-year plan for renewable energy will include pledges to boost wind power capacity to 90 gigawatts.

That target is to be met in part by the construction of seven 10 GW wind power projects, five of which are expected to be completed before 2016.

China has been doubling installed wind power capacity every year for the past several years. In 2009, it became the third largest wind energy provider worldwide — behind the United States and Germany — with installed capacity reaching 20GW.

The government's mandate that local power authorities buy the output from wind projects at competitive prices has helped create that boom.