CHINA BUYS, EATS U.S. LUNCH

China Buries Obama’s ‘Sputnik’ Goal for Clean-Energy Use
Ben Sills (w/Alex Morales, Reed Landberg, Feifei Shen, Christopher Martin and Todd White), April 4, 2011 (Bloomberg Businesssweek)

"China is beating the U.S. in the race to supply clean-energy technologies to the world…China Development Bank Corp., which listed [former U.S. secretary of state Henry Kisdsinger] as an advisory board member…agreed last year to lend 232 billion yuan ($35.4 billion) to Chinese wind and solar power companies. The U.S. gave about $4 billion to their American competitors in grants and offered about $16 billion of loan guarantees. Adding in private investment, China also led.

"CDB, which has almost twice the assets of the World Bank, is matching U.S. expertise with Chinese financing and manufacturing prowess to dominate a market both nations say is critical to their future. Chinese solar-panel makers such as LDK Solar Co. Ltd. were the biggest loan recipients and for the first time last year supplied more than half the global market…"

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"President Barack Obama said in January his country needs another “Sputnik moment” to wean itself off of foreign oil. The U.S. had just slipped to third place behind China and Germany in a ranking of nations funding renewable power in 2010 as Republicans in Congress blocked the White House’s energy spending plans…

"In addition to the $35.4 billion CDB pledged in corporate loans, state and private interests sank $54.4 billion into Chinese equity and project debt for clean-energy companies last year, up from $39.1 billion in 2009…In the U.S., which led the ranking in 2008, $34 billion was invested, trailing Germany’s $41.2 billion…Clean-energy loans constituted about 28 percent of all [CDB] lending…China’s state-driven investment hasn’t always paid off…Barclays Plc fell as much as 93 percent following [CDB’s] 2.2 billion-euro investment in July 2007…Still, CDB’s 35.3 billion-yuan profit in 2010 exceeded Morgan Stanley’s and its own 30.2 billion-yuan net in 2009…"

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"Obama is struggling to win support for his energy policy. The Republican-controlled House passed a budget proposal in February that will cut 2012 funds for the Department of Energy’s Energy Efficiency and Renewable Energy programs by 35 percent to $1.5 billion…The president proposed almost twice that amount…China will invest about [$75 billion] in clean-energy projects each year for a decade in a 5 trillion-yuan program aimed at steering the economy away from fossil fuels, under a five-year plan announced last month. CDB loans are expanding the manufacturing base, driving down the cost of the renewable- energy equipment it exports…

"CDB’s lending to the clean-energy industry rose 32 percent last year as it granted a five-year credit line to LDK Solar, the world’s largest maker of solar wafers, for the equivalent of $9.1 billion. The bank also loaned $7.6 billion to Suntech Power Holdings Co. and $5.5. billion to Yingli Green Energy Holding Co…Baoding-based Yingli, which this year began building new plants in Tianjin and Hengshui, Hebei province, will supplement its CDB credit with syndicated loans as it expands…The loans will allow China’s solar companies to sell more cheaply than global competitors by developing less-expensive panels and will protect them from hedge funds that are shorting their shares…"