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How Business Interests Hijacked US-China Relations

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The most concrete goods delivered by last week's bilateral state summit between President Obama and China's President Hu Jintao came not from heads of state but from CEOs, as US and China-based businesses signed a deal through which China agreed to buy $45 billion worth of American exports.

President Obama argued that these deals would create jobs the U.S. but as Robert Reich reported, that's not exactly right: "It will create more profits for American companies but relatively few new jobs."

"Clean energy" companies signed most of the deals. On Tuesday and Wednesday, the Brookings Institution and the China Institute for Innovation and Development Strategy hosted a series of meetings on the "US-China Strategic Forum on Clean Energy Cooperation" in conjunction with the summit.

China's VIPs included CEOs from the largest coal and nuclear companies: Wang Binghua from State Nuclear Power Technology Corporation; Zhu Yongpeng from Guodian Corporation, one of China's largest energy companies; and Zhang Xiwu from Shenhua Group, China's largest coal company. US guests of honor included James E. Rogers, CEO of Duke Energy; Aris Candris, CEO of Westinghouse; and Michael Morris, CEO of American Electric Power.

A number of agreements and memorandums of understanding came out of these meetings. GE signed a letter of intent with China Ministry of Railways, expanding on a preexisting agreement to bring China's technology to the US, in order to build high-speed railways -- a goal mentioned in Obama's State of the Union address.

US-based Westinghouse Electric signed a memorandum of understanding with two of China's leading nuclear power companies, in order to develop nuclear power capacity in both countries.

Several companies, including U.S.'s Duke Energy and China's ENN Group, signed agreements to develop and implement "clean coal" technology.

Companies that were given a presidential nod when they were invited to the White House's Wednesday evening state dinner for Hu included Goldman Sachs, JP Morgan, Chase, Microsoft, Boeing, the Carlyle Group and GE.

GE's position of influence has grown, not only through the letter of intent it signed with China, but also because -- amidst the US-China summit -- President Obama appointed GE CEO Jeff Immelt to head his economic advisory panel, a position formerly held by Federal Reserve chair Paul Volcker.

During the forum co-hosted by the Brookings Institute and the China Institute Innovation and Development, last week US Secretary of Energy Steven Chu and his counterpart Zhang Guobao from China's National Energy Administration hosted a signing ceremony for the US-China Clean Energy Research Center.

A $150 million dollar initiative of the US's Department of Energy and China's National Development and Reform Commission, the center will facilitate mutually beneficial agreements between US and Chinese companies and will focus on energy efficiency, clean coal and electric vehicles.

Events associated with the ceremony emphasized more how to use fossil energies efficiently and less how to connect renewable energy to the grid. Clean technologies and renewable energy were crowded into one session, cut short when Chinese investors stated that the US does not invite investment in clean technologies and renewable energy: it sends inconsistent policy signals and lacks incentives for the development of renewable energy.

Signs affirming that China's policies for investment in renewable energy are more coherent and long term than the US's have been evident in recent weeks. Solar panel maker Evergreen announced recently that it would shutter its main plant in Massachusetts, laying off 800 workers, and moving production to China. The reason? China's government provided much higher subsidies of solar energy.http://www.nytimes.com/2011/01/15/business/energy-environment/15solar.html

Earlier this week, the American Wind Energy Association announced that China has become the leader in wind energy capacity, seizing the lead from the US. According to the wind industry, US wind power in the US is hampered by uneven incentives: a lack of consistent and reliable federal policies on and subsidies for renewable energy.

Instead of taking the opportunity to up the ante of a US commitment to renewable energy by setting strong policy signals, Obama has largely left energy discussion to CEOs. The announcement on Monday of the departure of Carol Browner, his senior climate and energy policy adviser, has only increased concerns among environmental groups about the president's commitment to passing a climate bill, establishing a nationwide renewable portfolio standard (RPS). (China, like the EU, has established renewable targets. The U.S. has yet to set such domestic targets.)

While partisan divides are cutting deeper into American politics, one area where the left and right seem to get along is China bashing.

Pundits from both the right and the left accused Obama of coddling a dictator, pointing to the lavishness of the state dinner, Michelle Obama's "commie" red dress and Sasha Obama's eagerness to learn Chinese as evidence.

From Democrat Senate Majority Leader Harry Reid to Human Rights Watch and from Republican Speaker of the House John Boehner to Rush Limbaugh, the message was clear: China abuses human rights and is stealing our jobs.

In his State of the Union address, Obama stated that subsidies for oil companies will end and that the US will get 80% of its energy from clean sources by 2035. Without aggressive government investment and strong policy signals, it remains unclear how to get from here to there.

Tina Gerhardt is an academic and journalist.
Her writing has appeared in Grist, The Huffington Post, In These Times and The Nation.

Lucia Green-Weiskel is Project Manager of the Climate Change Program at the Beijing-based independent Innovation Center for Energy and Transportation (ICET).
Her work has appeared in Chinadialogue.net, Grist, The Huffington Post and The Nation.

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