China’s solar power industry destroying Obama’s plans for U.S.

Obama wants the United States to lead the world with its renewable energy industry, but China has a head start with fountains of support gushing from its government to the private sector. That support has taken the form of ultra-low interest loans, potentially free land, generous subsidies and money for research and development. A major focus for that investment is solar power.

In comparison, Obama’s administration just announced this month that it would set aside $2.3 billion in the form of tax credits for manufacturers in the United States that are building clean energy products. The manufacturing base in the U.S. has thinned considerably though and competing with the world’s production powerhouse, China, is a difficult proposition at best.

Instead, the U.S. and Europe may become consumers of China’s solar power outputs, as they currently are for myriad other products that sport the label “made in China”. Sensing the potential for bad sentiment to build among Americans regarding a foreign country taking renewable energy business, China is already approaching CEOs in the U.S., recruiting them to market against that perception.

Just like Japanese automakers Toyota and Honda, Chinese solar companies like Suntech are building plants in the U.S. to circumvent protectionist laws and contribute to local economies. President of Suntech, Steven Chan says regarding plans for a new plant in the states: “it’ll be to facilitate sales — ‘buy American’ and things like that,” according to The New York Times.

Chinese manufacturers have other advantages too, considering the availability of engineering grads for $7,000 per year and an ability to sell goods below manufacturing costs due to government support.

Any sort of American opposition may be diluted as companies like Suntech are hiring local talent for top positions in their U.S. operations. The American auto industry encountered a similar challenge in the 1980s when it sought protection from foreign competitors. Honda was directly participating in their trade group which caused the movement to lose traction.