United States

United States

America must push China for free trade

China cannot have it both ways. Chinese wind turbine firms cannot expect to enter the US market unopposed while even established turbine firms from the US and Europe are virtually excluded from selling into the Chinese market. Since the early 2000s, Vestas, GE, Gamesa, Suzlon and Nordex have been operating wind turbine assembly plants in China to supply that vast market. But their fortunes are fading.

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Market share for these foreign manufacturers plummeted from 75% in 2004 to 13.8% in 2009. Last year all 5.25GW of government-tendered wind power contracts went to domestic Chinese manufacturers and, since 2005, not a single international wind turbine manufacturer has won a national tender. The Chinese have increasingly favoured their domestic turbine suppliers, both through government-awarded power contracts and a range of policies that disadvantage foreign firms. China may say that it supports free trade, but its deeds suggest that it prefers protectionism.

Foreign turbine firms have remained quiet and diplomatic, not willing to ruffle Chinese feathers. Hope lingers that China may still become a lucrative market for them if policies are loosened and major government tenders include foreign turbines. Some have resorted to slashing prices in hopes of competing. But patience is wearing thin. The world's turbine giants whisper that pulling out of China is a possible move. Low-cost manufacturing may keep the lights on at the foreign-owned factories in China, but the turbines they produce may be sold outside the eastern superpower. Not surprisingly, the US supply chain, a vast network of manufacturers and machine shops, is worrying that the import of low-cost Chinese-made turbines and sub-components will crush the promise of green-collar jobs to fill the gap left by dying US manufacturing, such as the car industry. But this column is not an attack on global competition.

There is nothing wrong with foreign imports when the market works both ways. Last autumn, news that a Sino-American consortium planned to build a wind project in Texas with 600MW of imported Chinese turbines led to calls from Congress to limit federal incentives for wind projects that use foreign turbines. Those calls were wrong-headed. They disregarded the many thousands of jobs created in the US by European turbine vendors with factories here in the US. Most European firms aim to fully domesticate their supply chain for the US market from US factories and some are well on their way to doing so.

International build

On the flip side, just as looking under the bonnet of a Ford car reveals a multitude of foreign components, so does picking apart a US wind turbine. But will the many Chinese firms banging on the door at this year's annual US conference (page 64) follow suit like the Europeans with factories in the US? Some of the companies say they plan to, but that has yet to be proven. And whether or not they eventually build assembly plants in the US, should China's turbines be welcomed to America when US and European turbine firms are shut out from China, the largest wind market in the world? No, they should not. Free trade is not an unquestionable ideology to be followed blindly regardless of the consequences.

That said, nor is tit-for-tat protectionism in Congress against foreign vendors a satisfactory response. Instead, as a traditional champion for free trade, Americans need to better make its case to their Chinese colleagues. And the Chinese could do with listening - then acting.

Jesse Broehl is US editor of Windpower Monthly

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