Chinese clean energy sector booming

Changsha Clean Energy Manufacturing drives China's solar panel and wind turbine exports, scaling clean tech production with state subsidies, low-interest loans, and land grants, raising WTO trade dispute risks for Europe and the United States.

Until very recently, Hunan province in south-central China was known mainly for lip-searing spicy food.

Now, Changsha and two adjacent cities are emerging as a center of clean energy manufacturing, churning out solar panels for the American and European markets, developing new equipment to manufacture the panels, and branching into turbines that generate electricity from wind power across the region.

The booming Chinese clean energy sector, which increasingly encompasses green power technologies in production, now more than a million jobs strong, is quickly coming to dominate the production of technologies essential to slowing global warming and other forms of air pollution.

But much of China's clean energy success lies in aggressive government policies that help this crucial export industry, even as efforts to promote U.S. clean energy to China continue, in ways that risk breaking international rules to which China and almost all other nations subscribe, some trade experts say.

For instance, Hunan Sunzone Optoelectronics makes solar panels and ships close to 95 percent of them to Europe. To help Sunzone, the municipal government transferred to the company 22 acres of urban land close to downtown at a bargain-basement price. A state bank is preparing to lend to the company at a low interest rate, and the provincial government will reimburse the company for most of the interest.

But this kind of help violates World Trade Organization rules banning virtually all subsidies to exporters, and could be successfully challenged in a related tariff ruling context at the agency's tribunals in Geneva, said Charlene Barshefsky, a former U.S. trade representative.

Other countries can retaliate by imposing tariffs on imports, but companies in the clean energy business have been wary of filing trade cases, fearing Chinese officials' reputation for retaliating against joint ventures in their country and potentially denying market access, even as exports to China remain robust under existing controls.

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