Foreign manufacturers say they are being unfairly excluded from competing for state renewable energy projects resulting from China’s economic stimulus packageBut Beijing says because purchases for state investment projects
count as government procurement, priority must be given to domestic
products unless such a purchase is commercially unviable.
Joerg Wuttke, president of the European Union Chamber of Commerce in
China, said recently that foreign companies were effectively shut out
of the process when a US$7 billion package to manufacture 25 wind
turbines was made available. “It seems that the central government has
decided that this must be awarded to Chinese manufacturers and not
foreigners who have invested big in China,” Wuttke told the Financial
Four of the world’s top five wind turbine companies – Vestas Wind
Systems (Denmark), GE Energy (US), Gamesa (Spain), and Suzlon Energy
(India) – were rejected early in the bidding process. Companies engaged
in alternative energy production have been anxiously anticipating the
implementation of China’s stimulus package. Investments in areas such
as wind power are expected to be a high priority due to China’s efforts
to reduce its dependency on fossil fuels – Beijing has said that
wind-generated energy in the country will increase tenfold over the
But foreign companies are calling foul over their exclusion from the
process. Despite going to great lengths to meet the country’s
‘localisation’ requirements – rules requiring that a minimum of 70
percent of a given manufacturer’s equipment be sourced and built in the
country – foreign companies say they continue to be shut out of state
wind energy projects.
Foreign companies also say that an initiative to eliminate sub-1
megawatt wind turbines from China is discriminatory to foreign firms as
large capacity units are less common outside the country. But officials
insist that this preference is based on local conditions, rather than
an effort to buoy local manufacturers.
”The size of the turbine isn’t a strict government policy, but it is
a market decision made by enterprises,” Shi Liyan, the head of
renewable energies at the National Energy Administration, told Reuters.
“It is about wind conditions and the use of land, and investors are
willing to choose bigger turbines.”
Beijing counters that Chinese companies are similarly blocked from
major investment deals around the world. This sentiment was bolstered
last week when the multinational mining company Rio Tinto abandoned
talks with Chinese metals giant Chinalco, in favour of a deal with
Anglo-Australian miner BHP Billiton.
China’s wind power is not the only sector under scrutiny by foreign
firms. These critics also charge that similar conditions were faced
when US$2 billion in contracts were awarded to the rail sector and
others have complained that the country’s use of tax rebates is a
veiled form of protectionism.
China is not a party to the WTO’s Government Procurement Agreement –
the plurilateral agreement designed to prevent discrimination against
foreign companies when awarding state contracts. However, Beijing does
have observer status.