Are China’s Policies Hurting Green Energy ETFs?

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Includes: GEX, ICLN, KWT, PZD
by: Tom Lydon

The Obama administration has launched an investigation into whether China’s support for its clean-energy sector violates international trade rules, having a negative impact on green energy ETFs – particularly those with high U.S. exposure.

The United Steelworkers Union filed a complaint last month with the Office of the U.S. Trade Representative. Nancy Marshal Genzer for MarketPlace reports that the complaint is that Beijing’s subsidies for manufacturers of green-energy products are a violation of international trade rules.

The union says Beijing discriminates against U.S. clean energy companies that want to sell products in China and gives illegal subsidies to Chinese companies that make wind turbines and solar panels. The defense claims that the subsidies allow the Chinese companies to cut prices for green technology. Meanwhile, China has seized market share from the United States by driving prices down worldwide.

It’s uncertain whether a case will actually be filed against Beijing and with the World Trade Organization. Stacey Feldman of Reuters reports that the Chinese government spent $34.6 billion last year to propel its low-carbon economy, more than any other nation and almost double what the United States invested. Now the country headquarters six of the biggest renewable energy employers—up from three in 2008.

  • PowerShares Cleantech Portfolio (NYSEArca: PZD): United States accounts for 26.8% of exposure
  • iShares S&P Global Clean Energy Index Fund (NYSEArca: ICLN): United States is 24.9%; China is 22%
  • Market Vectors Global Alternative Energy (NYSEArca: GEX): United States is 51.6%
  • Market Vectors Solar (NYSEArca: KWT): China is 30.8%

Tisha Guerrero contributed to this article.

Disclosure: None