China Cleantech: How Competition, Innovation and Central Support Coexist

On the plane back to China, I read pieces by Tyler Cowen in the New York Times and Evan Osnos in the New Yorker that clarified my ideas about China, cleantech, and collaboration. Specifically, Innovation in China can benefit America!

Professor and blogger Tyler Cowen writes in the New York Times:

China, for instance, is moving toward the research frontier in areas such as solar power, scientific instruments, engineering and nanoscience, all of which can benefit the United States. …

It might be pleasant to boast that America is — or should be — a world leader in every area, but the practical reality is that if some other country solves the problem of green energy, so much the better for us. [more]

Evan Osnos’ New Yorker article Green Giant describes China’s efforts to support green innovation. Here are my personal take-aways from this long and nuanced article:

(1) The Chinese government provides generous support for cleantech innovation, but the competition is also intense.  Osnos spoke with coal engineer Xu Shisen, who explained:

“It’s very intense–like a presidential election, he joked, and he sketched out the system: “Normally, each project will have five to eight contenders–some less, some more–but there is a broad field of innovators.  A lot of the companies are doing the same thing, so everyone wants to have a breakthrough.”  He went on, “It’s not possible to have a flawless system, but it makes relatively few mistakes.  It combines the will of the state with mass innovation.”

(2) The conversation about China and climate change should shift from, “Will China combat climate change?” to “How will this affect the world?”

(3) 20-30% of the wind turbines in China are not producing electricity.  One underlying cause: local bureaucrats have been rewarded for installations rather than the quantity of electricity generated.  (Sidenote: Caijing recently published a scathing overview of this problem.)

(4) Encouraging teamwork within corporate culture leads to better performance, so Wu Gang, the chairman of Chinese wind turbine manufacturer Goldwind, has championed employee sports programs and hired coaches and music teachers. “We Chinese are very weak in this field–teamwork,” he explained.

(5) Running a lab in China costs 1/3 to 1/2 what it would cost in the U.S.  Osnos also notes that reports of low salaries in these labs are exaggerated: a senior coal-efficiency engineer earns about $100,000.  (Sidenote: Tom Friedman emphasized the low cost of hiring Chinese cleantech engineers in this column.)

(6) Senators Charles Schumer, John Kerry, and Lindsey Graham have expressed concern about China hindering America’s economy by dominating the cleantech sector.  Osnos’ response emphasizes the need for U.S.-China collaboration to enable new technologies that will benefit everyone:

… no single nation is likely to dominate the clean-energy economy. Goldwind, Coda, and the Thermal Power Research Institute are hybrids of Western design and Chinese production, and no nation has yet mastered both the invention and the low-cost manufacturing of clean technology. It appears increasingly clear that winners in the new-energy economy will exploit the strengths of each side. President Obama seems inclined toward this view. When he visited Beijing in November, he and Hu Jintao cut several deals to share energy technology and know-how which will accelerate progress in both countries. This was hardly a matter of handing technology to China; under one of the deals, for instance, the Missouri-based company Peabody Energy purchased a stake in GreenGen, so that it can obtain data from, and lend expertise to, a cutting-edge Chinese power plant.