Trade War Seen Looming as China Rebukes U.S. Support for Solar

China’s allegation that renewable- energy subsidies in five U.S. states violate free-trade rules ratchets up a potentially costly trade war between the world’s two largest economies.

“It’s a long, slow escalation of trade and currency wars as we race to the bottom,” said Theodore O’Neill, an analyst with Wunderlich Securities Inc. of New York.
Enlarge image Trade War Looming as China Rebukes U.S. Support for Solar

Chinese solar companies have criticized the U.S. Commerce Department's preliminary decision that they improperly benefit from government subsidies and sell solar cells below cost.

Programs supporting renewable power, including wind and solar, in Washington state, New Jersey, Massachusetts, Ohio and California, violate World Trade Organization policies and trade treaties, according to a preliminary finding of an investigation posted yesterday on the website of China’s Ministry of Commerce.

The announcement followed a preliminary decision by the U.S. Commerce Department last week to impose tariffs of as much as 250 percent on imports of Chinese solar cells. The agency said the units were being sold for less than the cost of production in an attempt to drive out domestic competition.

Both countries have identified renewable energy as a strategically important industry that could provide both jobs and clean power. As a candidate, President Barack Obama campaigned in support of a “green” economy that would replace jobs lost in declining sectors.

At least four U.S. solar manufacturers filed for bankruptcy in the past year even as federal subsidies helped build a $8.4 billion U.S. solar market.

Source:http://www.bloomberg.com/news/2012-05-24/trade-war-seen-looming-as-china-rebukes-u-s-support-for-solar.html