China’s Clean Energy Policy Gives It An Edge Over The U.S.

No country has come close to matching the scale and tenacity of China’s support for clean energy.

China’s industrial dominance is underpinned by decades of experience using the power of a one-party state to pull all the levers of government and banking while encouraging frenetic competition among private companies. I Photo: Hahaheditor12667 Wikimedia Commons

The proof is in the production: In 2022, Beijing accounted for 85% of all clean-energy manufacturing investment in the world, the International Energy Agency (IEA) disclosed, Patricia Cohen, Keith Bradsher, and Jim Tankersley reported for the New York Times.

Now the US, Europe, and other wealthy nations are trying to catch up.

Hoping to correct errors on industrial policy and learn from China’s successes, they are spending huge amounts on subsidizing homegrown companies while also seeking to block competing Chinese products.

They have made modest inroads: Last year, the energy agency said, China’s share of new clean-energy factory investment fell to 75%.

China’s industrial dominance is underpinned by decades of experience using the power of a one-party state to pull all the levers of government and banking while encouraging frenetic competition among private companies.

China’s production of solar panels and electric vehicles is built on the earlier cultivation of the chemical, steel, battery, and electronics industries, as well as large investments in rail lines, ports, and highways.

From 2017-2019, it spent 1.7% of its gross domestic product (GDP) on industrial support, more than twice the percentage of any other country, according to an analysis from the Center for Strategic and International Studies (CISS).

That spending included low-cost loans from state-controlled banks and cheap land from provincial governments, with little expectation that the companies they were aiding would turn immediate profits.

And it was backed by what the US and other countries have charged was China’s willingness to skirt trade agreements, engage in intellectual property theft, and use forced labor.