China’s Disruption in CleanTech
To be honest, I’m pretty bullish on China leading the future of cleantech for two main reasons — China has a plan in place, and China has put policies and dollars behind these plans. In my book EcoShot, I describe in detail how China has put out ambitious plans for various industrial sectors, including clean energy and clean mobility.
Made in China 2025
Made in China 2025 is a plan for China to become a leading advanced manufacturing powerhouses in the world — no, not cheap goods, but advanced sectors, from robotics to aerospace. Of the ten industries in the plan, two sectors are of particular interest to me: “new-energy vehicles” (electric vehicles) and “energy equipment” (e.g. solar and wind). The growing electricity and automotive industries account for trillions of dollar in opportunity for China, as the world looks to address carbon emissions. As noted in my book, China is seeing a transformation:
China is entering an aggressive transition from imitation to innovation, which is driven by a mix of domestic and global ambitions. The stereotype is that Chinese industries imitate (or steal) other innovative technologies, but the Chinese landscape is quickly changing, as the country seeks to be a world leader in technology. As George Yip, author of China’s Next Strategic Advantage: From Imitation to Innovation, put it: “[China has] actually a very rare trifecta…a triple play of a large home market, scientific and engineering capability, and manufacturing capability.” These advantages will help China for its aggressive moves to be an industry leader in cleantech.
America needs to wake up to the threat that China plays to our industries, especially for cleantech. Next, let’s discuss the progress China has made in clean energy and clean mobility.
Clean Energy
Chinese companies now accounts for 60% of global production of solar cells. We have China and Germany to thank for that:
China first got a wave of solar manufacturers due to the country’s interest in solar for domestic use. At the same time in the late 1990s, Germany incentivized and therefore increased demand for solar energy development. German manufacturers couldn’t meet the full demand for solar, so China noticed the export opportunities of solar panels to Germany. By the mid-2000s, a second wave of Chinese solar manufacturers entered to address Germany’s demand, with the added bonus of financial support from state-owned, provincial, and municipal financial institutions. In the late 2000s, the Chinese Development Bank made $47 billion in credit facilities for both solar and wind manufacturers, and by 2011, China was responsible for 46 percent of the global supply of solar modules.
The governmental support of Chinese solar manufacturers allowed China to become a global solar powerhouse within a little over a decade. The biggest solar manufacturers in China now are Trina Solar, Yingli Solar, JinkoSolar, Suntech Solar, and JA Solar. On the top ten list of global manufacturers, Chinese companies hold seven of the spots, with no American companies found on the list.
China has put similar efforts behind wind, hydropower, and nuclear. In my book, I provide similar stories behind these other sources of energy, as well as how China has made strides in expanding clean energy projects globally.
Clean Mobility
When people think about electric vehicles, Tesla comes to mind. But people need to pay attention to China. Chinese efforts to move to electric vehicles are even impacting business decisions by American companies. In my chapter on clean mobility, I touch on how the world’s biggest automotive market is influencing the global market:
At the end of 2017, General Motors announced it would be launching twenty new electric vehicles over the next five years, with CEO Mary Barra stating that “Clearly we believe the Chinese market will have the highest [number of] electric vehicles most quickly because of the regulatory environment.”
This major move by GM was in response to China’s announcement to eventually ban the sale of new gas-powered vehicles with no deadline set yet, but China has warned the global market of the direction that the world’s biggest auto market is moving. In 2017, China accounted for 35 percent of the global auto market, whereas the US accounted for only 8.6 percent. You can see now why even US automakers are looking for hints from China on where the country is going in terms of wants and needs of both the Chinese consumer and the Chinese government.
GM, Ford, and Tesla will work to compete in China, but dozens of Chinese companies already exist. I believe Tesla will make progress, as a new factory is underway in Shanghai, but other automakers will need to catch in electric vehicle technology to play a big role in this giant market.
I am also a big supporter of public transit, so I want to mention that Shenzhen became the first major city to implement an all-electric bus fleet in 2017 with a total of sixteen thousand “e-buses.” For every one thousand electric buses China puts on the road, the country avoids five hundred barrels of oil consumption per day. Electric vehicles are not only an emissions/pollution play for China, but also a national security play to decrease reliance on foreign oil.
China has a big opportunity to dominate the future of cleantech, since the Asian powerhouse has put policies and funding to support the next-generation of energy and mobility. In a decade from now, will the wind turbine in Texas come from an American business or a Chinese business? Will your electric car in 2030 be an American or Chinese brand?
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If you’re interested in reading EcoShot: How America Can Win The Industrial Revolution Against China, you can order it now on Amazon! Also, if you’re passionate about climate change and cleantech, let’s connect on Twitter, and you can follow me here on Medium. I’d love to have feedback, so leave a comment.
