The Washington Post reports that China is objecting to U.S. government support for six American solar and wind power projects.  Beijing says this violates free trade rules.

However, Beijing's complaints may simply be a case of tit-for-tat.

Earlier this year, the U.S. Commerce Department imposed duties of roughly 31% on dumped solar panels from China.

The Commerce Department decision came in response to China's "overproduction" and dumping of subsidized solar panels in the U.S. market.

This dumping is part of Beijing's manufacture-at-all-costs approach, with Chinese solar-panel manufacturing capacity being "32 times greater than domestic consumption," according to a Financial Times op-ed by Dr. Usha Haley.  As a result, China exports 95 per cent of its production. 

The burgeoning solar panel industry is important to U.S. manufacturing, and deserves federal support in the face of China's mercatilism.

Unfortunately, as Nish Amarnath reported in the International Business Times, yet another U.S. manufacturer of solar panels has closed its doors:

Abound Solar of Loveland, Colo., has become the third federally supported solar panel company to go bust in the past year, weakening the government's efforts to salvage the spluttering industry...

Competition from China made it more difficult for Abound to stay afloat. "Aggressive pricing actions from Chinese solar panel companies have made it very difficult for an early-stage startup company like Abound to scale in current market conditions," the company said in a statement.

Amarnath said that Abound's insolvency is "the latest hurdle for an industry that is still facing competition from China and reeling from the 2008 recession."

Key difficulties facing U.S. producers locked in tight competition with China are Beijing's massive subsidies for its manufacturers and a deliberately undervalued currency, which artificially lowers the cost of Chinese exports.

Amarnath quotes the Alliance for American Manufacturing (AAM) on this unfair trade, which violates world trade law:

Critics have been accusing China of manipulating its currency to gain an artificial export advantage to make Chinese goods cheaper in the U.S. and worldwide.

"The reason China does it is that it works. It's steroids," said Steven Capozzola, communications director at Alliance for American Manufacturing. "If you defend free trade, you have to be appalled at what China does. It violates trade agreements. It's distorting world markets."

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Photo from Flickr member Living off Grid, used with Creative Commons license.