Domestic Politics and U.S.-China Trade Disputes over Renewable Energy

This paper draws on the two-level game approach to analyze the influence of domestic politics on U.S.-China trade disputes in alternative energy, especially in solar energy. It suggests that the difficulty Washington faces in getting China to address market access barriers in renewable energy needs to be viewed in light of both the coalitional dynamics in the U.S. resulting from the specific bilateral trade and investment relationship in this sector and Beijing’s willingness to use industrial policy to foster economic competitiveness in nascent industries. Specifically, as China occupies the middle of the supply chain in the solar industry, both downstream users of low-cost Chinese imports and exporters of upstream products to China have voiced strong concerns about the U.S.’ trade action. Such domestic opposition, coupled with the importance of industrial policy for defending the country’s long-term interests in a “strategic emerging” sector such as alternative energy, substantially constrains Washington’s ability to influence Chinese policies. Dr. Zeng is Senior Research Fellow at and Corporate Secretary of the Wong MNC Center.

*****This working paper represents EAI Fellows Program Working Paper Series No. 44 and is posted with the generous permission of the East Asia Institute (Seoul, Korea). It does not represent the official opinion of the Wong MNC Center, but is posted to enhance knowledge and foster discussion.