As Chinese Power in Cleantech Grows, American Firms Scramble for Access

Last Updated May 21, 2010 3:11 PM EDT

Sometime in the not-so-distant future, China is going to be the center of the renewable energy. Despite serious efforts by countries like Germany, and pleading for more attention from industry advocates in the U.S., no other country is putting as much money or effort into building its cleantech sector as China.

So it's a matter of no small concern to countries, both in the US and elsewhere in the world, that China seems to also want to keep the benefits of its industry leadership to itself.

China is something of a special case when it comes to its cleantech spending. When the U.S. passed its American Recovery and Reinvestment Act, senators wrote in a "Buy American" provision that required government dollars to go only to American companies. The ploy worked, in that it attracted support from local industries, but the clause itself was invalid: the U.S. has signed an international treaty, via the World Trade Organization, banning such practices.

But China has yet to sign the same agreement. And while it appeared to be opening to outside cleantech firms a year or two back, the country recently moved to ban foreign firms from profiting on government contracts. Officials in the US are looking for ways to fight back against the maneuvering, according to the WSJ, sending commerce secretary Gary Locke on a trade delegation:

Mr. Locke said that in meetings with Chinese officials during his current trip to China he raised concerns about restrictions limiting foreign participation in offshore wind farms. However, he pointed out that the U.S. had successfully gotten China to repeal domestic content restrictions on wind turbines.

"We are concerned that as we make progress on one facet -- such as on energy -- other restrictions crop up," he said.

In a speech to the American Chamber of Commerce in China on Friday, Mr. Locke said that his "overriding concern is that there's not enough transparency, and a lack of a level playing field," in China. He added that "too many government policies openly or implicitly discriminate against foreign firms."

Locke is also leading a delegation from 24 renewable energy companies, who are pressing the Chinese government to let them in and scale back "indigenous innovation" policies, which go so far as to block technologies using foreign patents. Other Chinese policies require foreign firms to submit their technologies to the government, which could result in it being handed to an indigenous competitor.

Will the pressure work? The U.S. seems to be using its own export control policies as a bargaining chip, saying that it will allow more technologies to be sent to China. But there's no tit-for-tat deal in the works, and no guarantee that China will sign the WTO agreement.

As seems to be the case fairly regularly, China has the upper hand in the bargaining -- and it seems entirely likely that the country will continue trying to give its own firms the best deal, to the detriment of outsiders. But if China succeeds in becoming the cleantech center that it wants to, foreign companies may have no choice but to keep trying to compete.

Image credit: Wikimedia Foundation