China’s clean energy boom driven by “private firms”, not state

Rapid growth in new energy sector has made China an intermediary between developed and developing countries, says Asian Development Bank’s Cui Yongping.

Cui Yongping is chair of the energy committee at the Asian Development Bank (ADB), a financing and aid body which has invested heavily in Chinese wind, solar, geothermal, clean coal, carbon capture and industrial energy-saving industries. 

Xie Dan: Earlier this year, the US Department of Commerce issued its preliminary findings in the anti-subsidy case against China’s PV solar products. Will these anti-dumping and anti-subsidy moves influence ADB’s support for China’s new energy industries?

Cui Yongping: No. If you look at the investments we’ve made, we have supported clean energy in China, such as wind energy and solar energy. But the amounts invested have been falling. In 2011, ADB invested US$1.4 billion in India’s new energy sector. In China? You have to add in all investment types – roads, transportation, agriculture and urban development – to get to the same figure.

China has changed from being a large recipient of aid to an exporter of knowledge, with more money and better technology than ever before. Everyone knows about China’s experiences – and the best example is the rapid development of China’s new energy industries, which everyone has watched in amazement. So it’s hard to say if we’ll invest in new energy in China any more.

XD: How do you think other Asian countries regard the development of clean and new energies in China?

CY: The US anti-dumping and anti-subsidy measures actually demonstrate the problem – the whole world wants to know how China has got its new energy costs so low. That’s what I’m most interested in too. But I don’t think it’s the labour cost advantage you see in other industries. In developing Asian nations, labour costs are much lower than in China, but they haven’t done the same. So there must be other factors at work.

XD: So how do you think China did it?

CY: Many people in other countries think that it’s down to China’s centralised state power and strong implementation – China decided to develop new energies, and so new energies got developed. But that’s not the case, or the same would happen in other industries. It’s not something the government can just make happen. Rather, it’s because so many private firms saw a market opportunity and got involved. Those in the solar industry, where the market is strongest, are very aware of this. Also the scale of China’s market is something other countries can’t emulate.  

I am a firm supporter of south-south cooperation – economic and technical cooperation between developing nations – and hope that China’s experiences and approaches can be applied in other countries.

XD: What is China’s role in that?

CY: It lies in the process of transferring technology from developed nations to the developing world. For example, many multinationals and international bodies want to work with Vietnam directly, but they can’t, as they don’t have China’s advantages. Currently, developed-nation technology reaches Vietnam through China – first it’s absorbed, using China’s market scale and R&D capability to further reduce costs, before being acquired by other developing nations through cooperation with China. So first it’s north-south cooperation – developed and developing nations working together; and then south-south – developing nations working together. China acts as a pit stop.

XD: What problems are there with China’s development model?

CY: The unsuccessful part is the use of tough executive powers to achieve targets – the classic example is when power was cut off in order to hit energy-saving targets under China’s 11th Five-Year Plan. That shows both China’s strength and weakness. I’m very worried that we will see similar simplistic and crude measures in the 12th Five Year Plan.

China should learn from India here, about how to use the market to save power and reduce emissions. India has new energy-development targets for each state, but it doesn’t use executive powers. So what if you don’t meet your target? You can buy new energy from another state that’s done better. Currently China is testing carbon trading, but I think there’s more talk than progress – that’s one case where we haven’t seen China’s ability to do what it says it’ll do.

XD: Over-capacity in sectors such as wind power can’t be ignored. How do you explain such excessive expansion?

CY: I’ve been to global conferences on wind power, bioenergy, solar power, and everyone always says their form of energy is the most important and has the most potential. But the government needs to be clear about what’s actually feasible. When countries have decided how much clean energy to develop in the future, they also need to decide how to get there rationally.

Conventional energy sources are, after all, conventional. The new energy interest groups need to be realistic – if you can account for 5% of total energy, then do so, and develop alongside traditional energy. In fact for every step that new energy takes, reducing costs, conventional energy also moves forward a step. They are moving together.

Xie Dan is a reporter at Southern Weekend, where this article was first published.

This piece is published as part of our Green Growth project, a collaboration between
chinadialogue and the Energy Foundation.

Homepage image by Greenpeace