The new military spending bill bans Chinese-made solar panels on the eve of an official trade visit by China's president Hu Jintao. Image: CC swanksalot/Flickr

China is the top producer of solar panels in the world. The U.S. military is increasingly relying on solar energy as it operates in remote areas of Afghanistan where shipping fuel for energy is difficult. A military spending bill barring the Defense Department from buying Chinese solar panels was signed by President Obama a week before China’s president Hu Jintao makes an official visit to the U.S.

China’s clean energy racket

Solar panels may be a contentious issue in China/U.S. trade talks next week. Chinese solar panel manufacturers, heavily subsidized by the Beijing government, have captured more than half of the $29 billion international market. As the U.S. tries to narrow China’s lead in clean energy industries, members of Congress have accused China of violating free trade rules laid out by the World Trade Organization. Clean energy subsidies in the U.S. go to solar panel buyers, while China subsidizes solar panel manufacturers. Chinese solar power manufacturers then double-dip, dumping most of their product in the U.S. to benefit from its government subsidies.

Clean energy dispute clouds China/U.S. trade talks

Requiring the U.S. military to buy only American-made solar panels is bound to generate criticism from Chinese officials on the eve of Hu’s visit. A few years ago, China raised strong objections when the 900 billion economic stimulus package included a “buy American” provision for government procurement of steel and other construction materials. However, in 2009, China required that its entire $600 billion economic stimulus package be spent in-country. The Obama administration is preparing a case against Chinese clean energy subsidies it plans to bring before the WTO. At issue are allegedly illegal government subsidies for Chinese solar and wind energy exports that put U.S. and European companies at a competitive disadvantage.

China buys major European solar energy company

While the U.S. imposes trade restrictions on solar panels, China continues to aggressively pursue world domination in clean energy industries. State-owned China National BlueStar Corp. announced the purchase of Norwegian solar panel manufacturer Elkem for $2 billion. China’s acquisition of Elkem gives it cutting edge solar energy technology made by a company entrenched in the European market.

Sources

New York Times

UPI

Christian Science Monitor