Chinese capital is finally flowing into the U.S. clean energy market. Chinese direct investment in the U.S. clean energy economy has grown from just $4 million annually in 2006 to over $260 million in 2011. That increase is attracting attention, and not all of it is positive.

[Last week] Third Way released a report concluding that U.S. private-sector investors are losing interest in investing at home due to the fickle American policy environment, leaving Chinese companies to fill the gap. The report’s authors worry that increasing Chinese participation in the U.S. clean energy market will “dramatically hamper U.S. companies’ ability to compete” and “slow economic growth and American leadership.”

Rather than welcome Chinese direct investments as job-creating, there is a tendency here in the United States to take a zero-sum view and assume that Chinese enterprise successes in this country are not good for American competitiveness. Last month, when China’s ENN Group announced plans to build a massive solar power R&D, manufacturing, and generation complex in Clark County Nevada, some U.S. commentators suggested that the ENN facility would force solar panel prices down even further and drive U.S. firms into bankruptcy.

When it comes to the U.S. clean energy market, Chinese companies must feel like they cannot catch a break.

Over the past few months, many voices in the United States—myself included—have called for stronger U.S. trade enforcement vis-à-vis China, particularly in clean energy manufacturing. It appears that in at least some cases, Chinese manufacturing companies may be breaking global trade rules. If that is true, then U.S. policymakers have to do a better job protecting American companies and making sure WTO-illegal trade behavior does not erode U.S. competitiveness in this sector.

Playing by the rules goes both ways, however. If Chinese companies are willing to come over to the U.S. market and compete on an equal playing field, we should welcome that with open arms, not with knee-jerk protectionism.

Chinese competition is not the problem. As long as the field is level, U.S. companies can handle the competition. And if we open up new clean energy opportunities here in the U.S., ideally that will give the Chinese companies that are willing to play by the rules a pathway for opting in to our rules-based system. If those companies are successful, that success will be a positive contributor to the U.S. market, and it may also help convince Chinese leaders that heavy government subsidization is not the best pathway forward toward Chinese clean energy success.

In reality, the real problem isn’t that Chinese companies are investing too much in U.S. clean energy technologies. The real problem is that they are not investing enough.

The United States does not have a clear policy framework on foreign direct investment. That makes our market difficult to traverse, and that means that in many cases, the only Chinese firms that can succeed here are the well-connected state-owned enterprises who are much more interested in fossil fuels than clean energy.

Growth rates for Chinese clean energy investments in the United States only look impressive when viewed in isolation. When you compare those numbers to the numbers for fossil fuels, clean energy is still just a drop in the bucket. In 2011, for example, China invested just under $2 billion USD in American fossil fuel sectors. Most of those investments went toward U.S. shale gas assets. The $260 million that went toward clean energy projects pales in comparison.

If we want to accelerate the clean energy market, we need to do more to level that playing field for U.S. and Chinese investors alike.