After noting a drop in financial support from Beijing in the form of tariffs, the panel rejected the projects, saying they were profitable and capable of cutting greenhouse gas emissions without receiving carbon offsets under the Kyoto Protocol's Clean Development Mechanism (CDM).
"The decision could have a severe effect on Chinese wind investment.... Half of all projects could fail to be registered under the CDM, or possibly worse than that," said John Green, a director at Carbon Resource Management, one of the largest developers of Chinese wind projects.
Green added that the move could also have a big impact on companies raising capital for investment in Chinese wind.
Under Kyoto's Clean Development Mechanism (CDM), companies can invest in clean energy projects in emerging countries like China and receive carbon offsets which can be sold for profit.
These projects must prove they are making additional emissions cuts that normally would not have taken place, so-called "additionality."
There are over 200 Chinese wind farms in the CDM pipeline, expected to cut around 100 million tonnes of carbon dioxide, which could be hindered by the executive board's decision.
At recent market prices, the offsets generated by these projects could be worth some 1.4 billion euros (US$2.1 billion).
"This is sending a very significant, negative signal to the market not to invest in these projects. The board has set a very dangerous precedent," said Belinda Kinkead, head of implementation at developers EcoSecurites, which was bought last month by investment bank JP Morgan.
"We're very surprised they did this... There's a lot of confusion over what the CDM's executive board wants and I'm hoping that we get clarity on this in the next couple weeks."
One of the largest CDM developers, EcoSecurities has some 10 Chinese wind farms awaiting review by the CDM's executive board.
Kinkead said a project gets approved if its internal rate of return is lower than the highest subsidized tariff that had been used in that region, but said that a couple projects that had used that approach had been rejected.
"It seems politically motivated and it needs to be addressed by the Chinese government instead of individual projects getting caught up in it," she added.
Green warned that the decision may affect other types of clean energy projects seeking CDM approval.
"Chinese hydro dams will be affected as well... several projects are being requested for review for exactly the same reasons," he said.
Kinkead, along trade groups Global Wind Energy Council and International Emissions Trading Association, called for more transparency on the board's decision to reject the projects.
"The executive board had some analysis done but nothing has been made publicly available," Kinkead said.
"Of all renewable energy projects, wind farms have always been seen as the most desirable and attractive because you couldn't question their additionality."