China's green high-tech?
Again lately, there has been a lot of blogging about China’s new “economic nationalism”. Two days ago, there was a NYT article about how foreign businesses are getting shafted in China as China clearly no longer needs FDI.1 (h/t to China Law Blog). In my (as usual) not-so-coherent comments I left at China Law Blog, I noted that this “glass half empty” picture is way to simplistic. It really depends on what sector of the economy. I also noted that, as China does not have international advantages in the front-end value-stream (aka, marketing and brands), and in general Chinese industries use previous generation technologies, China is essentially pursuing a “lagging leader” strategy.
Yesterday, in the Washington Post, another article about how China is beating the US and the rest of the world in the Green Technology race by investing millions of dollars (with the help of Goldman Sacks) in new green tech development zones.2 This article covers the development of a new “green industrial zone” in Northern China:
Uprooting the last traces of rural life on the edge of this northern Chinese city, laborers with chain saws spent a recent morning cutting down trees to make way for a hulking factory. A big red banner trumpeted the future for what used to be farmland: “The Biggest Solar Energy Production Base in the Whole World.”
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“This is an experiment. It is a big laboratory,” said Huang Ming, an oil industry engineer turned solar energy tycoon, who is driving one of China’s boldest efforts to promote, and profit from, green technology.
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At the center of his outsize ambitions is Solar Valley, a massive exercise in social, economic and ecological engineering. As part of the project, tens of thousands of farmers have been moved into concrete apartment blocks and their land is being converted into what Huang and Dezhou’s planners hope will be China’s clean-technology answer to California’s Silicon Valley.
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The $740 million plan has attracted about 100 companies and spawned factories, a research center and wide boulevards illuminated by solar-powered lights.
OK. The article is not really about how China is beating the US in green tech sectors, but I feel that is the subtext.
Later the article profiles the CEO of Himin Solar Energy Group, which is creating a big factory in the new green technology park. Hinmin primarily makes thermal-solar water heaters. Which are primarily heat-collecting tubes attached to a water tank, mounted on a roof-top. Thermal-solar is far more efficient (money-wise) than photo-voltaics. Hinmin’s products are also probably quite good. And cheap. It can be made just about anywhere. Like everything else, there are many Chinese manufacturers of this type of product. The thing is,… this product can be made in a garage.
Don’t get me wrong… China is at least investing in solar while the US dithers. But this is just another example of negative “China hype”. China is going to dominate the green technologies markets! Er…by making galvanized steel water tanks with attached vacuum tubes ? Can anyone say that this new green tech park makes economic sense? Is there going to be anything particularly high-tech made there?
I think this article shows an example of my point about becoming a leader in lagging, but still useful technologies. A lot of hoopla about how China is beating the West (or setting up barriers to help Chinese businesses beat the West). However, in the end, there is nothing special here to see.
3 Responses to “Again the (solar heated) glass is half empty”
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(First on-line comment — bear with me:)
I’m not sure where the “beating the world in green tech” comes from, but I’m guessing it is money. Add up the 3-gorges dam price tag, investment in wind-mills and what have you, some optimistic numbers quoted in investment glossies, fudge and extrapolate, and wow, more dollars are being spent on ‘green’ in China than in the US or some other places. Means nothing, except an opportunity to sell add-space in a newspaper or website.
China is doing something, maybe more than the US or other places, which is good. But China is hardly leading the world in this area, no matter how numbers are fudged. The technology is old. The focus is on making money, not advancing the bleeding edge of technology. That is on the government’s wish list for sure, but there’s a gap of decades to overcome in just about any sector, including green tech. If we take different ‘leadership’ metrics, such as papers and patents, absolute or per capita, is China still leading the world in green tech? If ‘leading the world’ is measured in terms of the application of decidedly low-tech or old technology, then yes, maybe. There’s loads of solar-heated hot water supplies on top of buildings that I see, more than in some other countries. But that’s about it, I’d say. Leading the world? California, Spain, Germany, maybe?
As for economic nationalism, I think that’s nonsense to sell add-space. As far as the low-tech water heaters are concerned, various foreign companies sell these things in China too, just like the locals. One might even argue the opposite of economic nationalism, complain that the likes of Siemens or GE have an unfair advantage because they already have high-tech (resulting from government funded universities, infrastructure, R&D, policy, etc) while Chinese companies don’t, and even if they did invent some, it’d already be patented, boohoo…
Not to say that there might not be roadblocks in the energy industry (in China). Energy is one of those industries that are ‘special’ and governments all around the world put up barriers to prevent ‘foreign control’ of these strategic services. Some even go to war over it! Has anybody started complaining yet that China is leading the world in ‘military industry’? After all, in boots on the ground they’re the biggest (I think) and China is not allowing other nations from starting armies in China. The PLA has a monopoly, boohoo, call the WTO. Or not….
My conclusion, I think, is that I agree with Jesse. Statements to the effect that ‘China is beating the world in green tech’ are incorrect, and that it is doing so through ‘economic nationalism’ is nonsense. I for one feel that it is more interesting to focus on what is actually happening, what is good about that, and how can it be improved on.
Hi Michiel,
First, thanks for posting. My blog is new and I’m always incredibly excited when people read some of my ramblings and then post their thoughts. Thank you.
I never thought of the Three Gouges Damn project as part of green energy. Does China’s government consider this green?
China does have national industrial policy. America does not. But its silly to blame China for something that America should be doing, but isn’t because of greed and ideology.
China is beating the world in public sector investment into green technology. That is because a) Chinese banks basically give interest free loans to Chinese green tech companies, and b) China has many green-energy public sector projects. However, a great deal of this money is spent on lagging edge technology, and a great deal of the investment is simply re-invested into real-estate and stock markets. The fact is that this money is blocked to foreign companies on multiple levels (at public tendering, technical barriers, etc). But in the end, this is just the beginning. No… this is before the beginning of real green-energy investment, because what is being built today will not be around in 5 years.
It remains difficult to determine the true nature (sic) of green tech. If China is pumping money into green tech companies/projects who then channel the money into stocks or real estate, then does that still count towards ‘leading the world’? Or if money is spent (wasted?) on wind-parks that cannot run at capacity because they lack the required network connections?
I think the three-gorges project counts as green tech. Common definitions of green or renewable energy include basically anything that does not involve burning fossil fuel, e.g. wind turbines, solar panels, hydro-electric generation, geothermal heat exchanges, etc. Some argue that nuclear energy should be included in the list, but that is certainly controversial.
This is a nice topic to discuss (especially for me as electrical engineer) as long as it is kept out of the realm of comparing apples and oranges to prove who is leading. It is hardly a relevant question. If it were, I would look for who generates the most Watts (per capita or as a percentage of total) using methods other than burning fossil fuel. In other words, counting wind turbines, hydro-electric generators, solar farms, etc. China is certainly stimulating this, although AFAIK they are also still building coal-fired power plants like there is no tomorrow. Are they doing better than other countries? I don’t know…