Reporting from Washington and Los Angeles — The Obama administration, facing increasing political pressure to address complaints about China's economic policies, said Friday that it was investigating whether China was illegally subsidizing its clean-tech industry — even as officials put off a difficult decision on whether to cite Beijing as a currency manipulator.
U.S. Trade Representative Ron Kirk said his office was probing allegations filed last month by the United Steelworkers Union that China was assisting its domestic producers of wind, solar and electric car products with protectionist and subsidy policies in violation of World Trade Organization rules.
The complaint blames these policies for a large and growing U.S. trade deficit in clean-energy goods with China, which has emerged as a dominant producer and market for such products.
"Green technology will be an engine for the jobs of the future, and this administration is committed to ensuring a level playing field for American workers, businesses and green technology entrepreneurs," Kirk said.
Although the White House sought to portray itself as a strong defender of America's economic interests and jobs — the dominant theme in the midterm elections — administration officials took a much softer line on the politically charged issue of China's undervalued currency, which many see as a culprit in the lopsided trade balance between the two countries.
By deferring a semiannual report to Congress that was due Friday, Treasury Secretary Timothy F. Geithner delayed a decision to brand China a currency manipulator — a largely symbolic step but one that would almost certainly embarrass and antagonize Chinese officials.
Geithner acknowledged in a statement that China had stepped up the pace of currency appreciation in the last month, and said the Treasury would postpone the currency report in light of several important international meetings in the coming weeks that would discuss global economic issues.
Some members of Congress reacted angrily to the White House's wait-and-see approach, saying it reflected the administration's unwillingness to get tough with China. Democratic lawmakers, including House Speaker Nancy Pelosi (D-San Francisco), applauded the probe into China's clean-energy industry policies but made no mention of the delay in the currency decision, despite pushing through a bill last month to punish the Chinese for holding down the value of the yuan.
That measure faces a much tougher road in the Senate, and Obama would be hard-pressed to sign it, given that he wants cooperation from Beijing on a wide range of contentious geopolitical issues, including North Korea and Iran.
The trade representative's office declined to comment about the timing of the launch of its investigation, which may have been aimed at steering the focus away from China's currency to broader economic policies.
Some U.S. executives in clean technology supported the administration's action but were generally reluctant to criticize China's economic policies to avoid jeopardizing future business and production in the rapidly expanding Asian market.
Indeed, clean-tech manufacturing and investment is increasingly shifting over to China, and Asia in general.
U.S. companies, such as giant Arizona-based manufacturer First Solar, are now working on major projects in China. Several firms have complained that the Asian country is much more welcoming of clean-tech ventures than the U.S.
But Michael T. Eckhart, president of the American Council on Renewable Energy, said China had "aggressively" subsidized an industry where only 5% of the solar panels made there are actually installed there. "That makes it pretty clear that, by intent or outcome, this is an export industry," he said. "So, China might be found in violation of the rules."
Chinese and Taiwanese companies produced 80% of the photovoltaic cells made in the third quarter, and were also responsible for most of the global spending on related manufacturing equipment over the last year, according to a report this week from research firm Solarbuzz.
Last year, clean-tech investment in China surpassed funding levels in the U.S. for the first time, according to a report from the Pew Charitable Trusts. Clean-tech investments in China grew to $34.6 billion, up from just $2.5 billion five years ago.