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China Wind: Caught in Trade Crosshairs alongside Clean Tech Sectors

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China's Wind Industry Caught in Trade Crosshairs

China's wind industry is the latest clean energy sector to face scrutiny from foreign trade officials. The European Union's acting competition commissioner has suggested that wind power could be investigated if Chinese firms are found to receive excessive government aid. This comes as the EU is already conducting an anti-subsidy probe into Chinese electric vehicles, and the US has targeted Chinese solar panel makers for price-dumping and other unfair practices. Trade tensions are disrupting the remarkable growth of China's clean energy and supply chains, which have been instrumental in the fight against climate change. The EU aims to become more self-sufficient in clean tech and reduce reliance on China, as it experienced with the solar sector over a decade ago. However, it is important to note that European countries like Germany and Spain were pioneers in providing renewable energy subsidies to support these industries during their early stages. While it remains uncertain whether an investigation into wind power would be in the EU's best interests, the commissioner for energy has not ruled out the possibility. Chinese wind companies, which have primarily focused on the domestic market, are now expanding overseas. They offer competitive prices, with discounts of approximately 20% compared to European and US producers. China's national and local governments have supported the wind industry through various means, including direct investments and preferential arrangements. These efforts, combined with scaling up and cost reduction, have made wind generation about half the cost of new coal power in China. Although any measures to constrain Chinese companies in the EU may have limited immediate impact due to China's low market penetration, they could create barriers to competition in the future. Additionally, they may hinder the growth potential of Chinese firms. It remains to be seen how an investigation into wind power would unfold, as most of China's renewable energy subsidies are paid to project developers rather than manufacturers.

Hot Take: Impact of Trade Tensions on New Businesses in the Wind Industry

Understanding the Current Scenario

China's wind industry, currently under the scrutiny of foreign trade officials, could have significant implications for new businesses in the clean energy sector. The European Union's potential investigation into wind power, on the grounds of excessive government aid to Chinese firms, could disrupt the growth trajectory of China's clean energy sector, which has been a key player in combating climate change.

Implications for Market Dynamics

The EU's aim to become self-sufficient in clean tech and reduce reliance on China could lead to a shift in market dynamics. While European countries like Germany and Spain have historically supported renewable energy industries with subsidies, the potential investigation into wind power could create an uncertain business environment for new entrants.
The Chinese Wind Industry's Global Expansion
Chinese wind companies are increasingly targeting overseas markets, offering competitive prices that undercut European and US producers by approximately 20%. If measures to constrain Chinese companies in the EU are implemented, they could pose significant barriers to competition for new businesses, potentially hindering their growth. In conclusion, the unfolding situation in the wind power sector, with China at its center, could have far-reaching implications for new businesses in the clean energy sector. Navigating these challenges will require strategic planning and a keen understanding of the evolving global energy landscape.
Story First Published at: https://financialpost.com/pmn/business-pmn/china-wind-joins-clean-tech-sectors-caught-in-trade-crosshairs
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