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2009-05-28 | All chapters
European Business Group Criticizes China In Wind-Power Bidding
Terence Poon, Dow Jones Newswire, 27th May 2009
BEIJING -(Dow Jones) A European business group in China Wednesday urged Beijing to be more transparent in awarding contracts under its stimulus program, citing ongoing bidding for a US$5 billion wind-power project as an example of how the government's opacity hurts foreign businesses.
"As we understand, European business and all the foreign business are out of the race" for the 5.2-gigawatt wind-power deal, even though many European wind- power companies have set up plants in the country, said Joerg Wuttke, president of the European Union Chamber of Commerce in China.
The government's role in awarding the contract gives the power companies little room to give orders to foreign firms. Also, a focus on initial costs and not over the lifespan of the equipment, hurts foreign companies, too, he added.
"There seems to be a drive by the central government...to award this to a Chinese-Chinese" to help them grow and deal with excess capacity, said Wuttke. Members of the chamber have seen a tightening of the bid process for foreign businesses, he said.
Besides requiring foreign wind-power developers to make 70% of their parts in China, most of the big-scale wind farms in the nation go through a central bidding system. Chinese companies usually win these bids.
In November, Beijing introduced a CNY4 trillion stimulus program, which included spending on infrastructure projects, to support economic growth. Foreign businesses in China hope to capture a share of the public spending and have urged the government to offer more details and to be more transparent about the stimulus projects.
The stimulus program has stabilized the Chinese economy and, despite the problems over bidding for the wind-power project, appears to be helping European businesses in other industries in China as well.
Wuttke said some European businesses, particularly in fields like railway, home appliances and automobiles, have reported a pickup in orders starting around March.
He didn't identify the wind-power project, but state-run Xinhua News Agency reported earlier this month the National Development and Reform Commission has approved a wind-power project in the Western province of Gansu. The project will have a 5GW capacity in 2010 and 12GW in 2015.