Bloomberg News

Goldwind Signs $5.5 Billion China Development Bank Wind Pact

February 01, 2012

(Updates with analyst comment in fourth paragraph.)

Jan. 31 (Bloomberg) -- Xinjiang Goldwind Science Technology & Co., China’s second-largest wind-turbine maker, signed a financial agreement with China Development Bank Corp. for wind power projects worth 35 billion yuan ($5.5 billion).

The accord signed through its unit Beijing Tianrun New Energy Investment Corp. also covers asset acquisition, Goldwind said today in a statement to the Hong Kong stock exchange. The agreement runs to 2013, according to Urumqi-based Goldwind.

Goldwind’s latest agreement comes after it received a 10 billion-yuan credit facility from Industrial & Commercial Bank of China Ltd. in November. China’s state-controlled banks are signing billions of dollars of credit lines with wind and solar manufacturers including Sinovel Wind Group Co. and Suntech Power Holdings Co. Ltd. to fund capacity expansion and overseas business, according to Bloomberg New Energy Finance.

“The Chinese Development Bank is helping domestic companies fund overseas expansion and asset purchases as their home market slows,” Lawrence Brader, a Hong Kong-based trader at Parry International Trading Ltd., said today by e-mail.

“China’s wind market nearly doubled every year from 2006 to 2010, and domestic turbine makers kept expanding capacity when growth stalled in 2011,” Charles Yonts, an analyst at CLSA in Hong Kong, said by e-mail. “They will be working off the excesses for a couple years and pushing exports, especially to emerging markets.”

Unfair Trade Practices?

The export push occurs as U.S. President Barack Obama said last week he was creating a new trade enforcement group to combat trade practices in nations including China that manufacturers say reap unfair advantages from heavy subsidies.

China Development Bank, which offered a $6 billion credit facility to Goldwind in 2010 for international expansion, loaned about 93.8 billion yuan to clean energy and a group of energy- saving projects that year, according to London-based New Energy Finance.

Goldwind and domestic rivals are seeking orders overseas to overcome slowing sales growth in the second-largest economy after the government tightened criteria for approving new projects. Goldwind bought two 10-megawatt wind farms in Montana this month and has orders in seven other U.S. states. Sinovel said yesterday it expects 2011 earnings to fall by more than 50 percent as competition at home and abroad dragged down prices.

Renewable energy is one of seven “strategic” industries receiving government support as the China attempts to diversify away from coal, which fuels 70 percent of the economy. Goldwind will work with the bank on mid- to long-term development planning, according to today’s statement.

--With assistance from Sandi Liu in Hong King.

--Editors: Randall Hackley, Reed Landberg

To contact the reporter responsible for this story: Sally Bakewell in London at Sbakewell1@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net


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