Chapter 2: China’s mercantile strategy to boost renewable sectors
Amidst increasing global concerns about climate change and energy security, the booming renewable energy industry has emerged as one of the major business opportunities of the twenty-first century. In research by the PEW Charitable Trusts, these clean energy projects include all biomass, geothermal, and wind generation projects of more than 1 MW, all hydro projects of between 0.5 and 50 MW, all solar projects of more than 0.3 MW, all marine energy projects, and all biofuel projects with a capacity of one million or more liters per year (PEW Charitable Trusts 2010, p.41).
Under the mercantile model of state capitalism, in the initial stage of incentivizing renewable sectors China paid more attention to export-oriented production of wind turbines and solar panels rather than the costly renewable power generation and consumption on its homeland. Such an asymmetrical development strategy subsequently led to serious manufacturing overcapacity and chronical trade disputes with the United States and European Union (EU), which forced the government to gradually stimulate domestic demand through subsidizing local power generation projects to absorb redundant manufacture capacity. China’s transition from subsidization of export-oriented manufacturing to domestic demand stimulation was also state-driven, proven to be unnatural and painful with unintentional consequences of overcapacity in domestic renewable power generation projects.
China’s industrial planning has included a focus on increasing Chinese capacity and production of wind turbines, solar cells and modules, using state incentives, subsidies, and tariffs to dominate the global supply chain. China institutionalized its efforts to develop clean...
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