United States in Greentech Race with ChinaThere has been growing talk about a clean-tech race between China and the U.S., often cast in ominous tones. But the quest to develop and implement renewable energy can be one where both nations win.  Please, vote in the poll at the bottom of the post.

by Christina Larson, Yale Environment 360

At a factory in Wuxi, China, workers lift solar panels onto conveyor belts, while others in white lab coats move between machines as they check on a process for etching and engraving silicon wafers to form solar cells.

This scene in itself isn’t remarkable. But there is a new sort of excitement about the work. China’s production of solar panels has grown quickly in the past two years; it is it now the world’s leading exporter. When Matt Lewis, a representative of the California-based nonprofit ClimateWorks, visited the factory in October, he said it reminded him of his native Silicon Valley: The workers, even ordinary line workers, had a sense that they were part of building the future, the hot new industry.

This comparison makes some in the United States, and especially in Washington, nervous. Thomas Friedman has used the bully pulpit of his influential New York Times column to warn that the United States is engaged in a global green-tech competition with China, whose potential dominance represents a “new Sputnik.” (“How do you say ‘clean your clock’ in Chinese?” he wrote.) This notion, conjuring residual memories of the days in which U.S. rivalry with Soviet Union was crystallized in the space race — when the word “Sputnik,” the name of the Soviet space program, inspired quivers of anxiety about America’s political and economic prowess and its existential place in the world — has today struck a resonant chord in Washington, drawing upon existing fears and mistrust of China.

While some U.S. politicians and commentators still paint China as the global pollution villain, especially after the disappointing outcome at Copenhagen, others are beginning to take green China seriously — as a threat. Last fall, for instance, when Senator Charles Schumer got wind of a planned wind farm in west Texas, announced by a partnership of American and Chinese companies, that would use some wind equipment made in China and potentially create new jobs across the Pacific, he recommended blocking stimulus money from the project, rather than help boost green China. The stimulus money “is supposed to create jobs in America,” he wrote in a letter to Energy Secretary Steven Chu. (The new wind farm would also have created 300 jobs in Texas, but Schumer was worried that a greater number could be created in China.)

Last month, a front-page Sunday piece by Keith Bradsher of the New York Times took the competition metaphor a step further and declared that China was in fact already winning the green-tech race. The article, “China Leading Race to Make Clean Energy,” made the rounds in Washington with its assertion that China had passed the U.S. and several western European countries to become the word’s top manufacturer of both solar panels and wind turbines; it quoted the CEO of a private equity firm in Beijing saying, ominously, “Most of the energy equipment [of the future] will carry a brass plate, ‘Made in China.’”

The Times article also raised another spine-tingling geopolitical comparison — this time not likening Beijing to the latter-day USSR, but to the modern-day Middle East. “[China’s] efforts to dominate renewable energy technologies,” Bradsher wrote, “raise the prospect that the West may someday trade its dependence on oil from the Mideast for a reliance on solar panels, wind turbines and other gear manufactured in China.” In other words, China might become the Saudi Arabia of alternative energy; the implication seems to be that not only might green China pose an economic threat, but the sheiks of Beijing might soon wield undue political influence over a “dependent” United States.

Few business stories have ever been imbued with so much gravitas, so many fears, so many metaphors, so much geopolitical speculation, as the recent articles and coverage of China’s growing green-tech manufacturing sector.

Behind these fears, there is something worth probing — and some myths worth dispelling. Just what are Americans afraid of? To distill the cloud of anxiety, there seem to be three chief fears. The first is very tangible — jobs. The second is about America’s place in the world — will the U.S. remain a global leader in innovation? And the third is about leverage — will the U.S. control its future, or be beholden to a foreign energy gatekeeper, one that exerts undue pull on its economic or foreign policy?

“Even when you are looking at these big numbers that are coming out of China today, I think it really pays to give a close look at what is actually happening on the ground,” says Elizabeth Economy, director of Asia Studies at the Council on Foreign Relations and author of The River Runs Black: The Environmental Challenge To China’s Future (Council on Foreign Relations Book). “Then you begin to get a different, more nuanced picture than what is blasted on the business section of the New York Times.”

The first essential fact to be aware of is that most news stories about China’s greentech gains are about manufacturing. China is becoming the wind-turbine factory to the world for much the same reasons it has long been the TV and t-shirt factory to the world: lower wages, lower land prices, fewer regulatory and other requirements, etc. This isn’t particularly surprising, and it shouldn’t be seen as a reversal of the status quo. What’s changed most dramatically in the last five years has been growing global demand. With significant government investment, Chinese factories have planned for and stepped up production accordingly.

Yes, this is bad news for U.S. cities like Detroit, where planners have recently been retrofitting old hot-rod factories into wind-turbine factories, such as an old Ford Thunderbird plant in Michigan that’s being converted into a green-tech manufacturing center in a bid to boost the local economy. China, especially low and medium-tech manufacturing, has certain clear economic advantages. But it’s also worth considering a few other facts. Most of the green manufacturing jobs that the U.S. stands to “lose” haven’t in fact been created yet; China will gain thousands of new jobs, but not necessarily at America’s expense. Moreover, the United States will still gain many new green-collar jobs, in installation and maintenance, which can only be locally based, as well as sales teams, conference planners, and other positions already arising to support the growing green-tech field.

Besides green-tech hardware, there’s also the question of the technology that enables it. Who will be responsible for the innovation that drives the low-carbon future? At present, America still has significant advantages — including the world’s leading university system and the entrepreneurial culture and venture-capital spigots of technology hubs, particularly Silicon Valley. “Intellectual property rights have done a lot to hamper China’s development of green technology,” says Linden Ellis, U.S. director of nonprofit China Dialogue. “People would rather come to Silicon Valley and develop a technology where they know it will be protected by the law, right down to every line, than go to China and try to develop a technology there where maybe the components will be cheaper and there is a lot of interest, but people do not trust that their findings will be protected.”

Similar concerns have, for the past two decades, grounded Beijing’s attempts to build a domestic airline industry, considered the pinnacle of high-tech manufacturing. Foreign companies and top-notch engineers have simply been unwilling to share technology with China (Boeing has even avoided building factories in China, for fear of commercial espionage). The result: Planes that fly from Beijing to Shanghai today are still built by Boeing and Airbus.

Of course, most green-energy equipment won’t match the complexity of assembling something like Boeing’s new Dreamliner, but the airplane situation sheds light on two points: that cheap labor is hardly the only factor driving business decisions, and that, despite substantial government support, China’s domestic aerospace engineers have not yet produced research to rival that of Western competitors. (China’s university system and research labs are famously politically constrained, limiting their ability to attract top global talent.)

Of course, China would like to change this. Beijing is doing its best to both allay the fears of international partners and to nurture its own homegrown innovators. A program known as the “State High-Tech Development Plan,” launched by Beijing in March 1986 and nicknamed the “863 Program,” aims to develop top scientists in China and to incubate cutting-edge technology projects in energy and other sectors. So far, its results have been modest over two decades: birthing a family of computer processors known as Loongson, and some technology used in the Shenzhou spacecraft. While the 863 Program’s track record should certainly dispel Western assumptions that no good research can come from China, it also disproves the notion that money alone can clone a Steve Jobs or Bill Gates or Sergey Brin.

This should allay some anxiety in Washington about America having fallen behind, but it is not a reason to become complacent. America has neither relinquished, nor is forever assured, her innovation crown.

Meanwhile, folks in the green-tech and environmental frontlines — as opposed to politicians and commentators — don’t see a “race” at all. “I do not see such a pattern exists,” says Wen Bo, a Beijing environmentalist. “The clean-tech war is overblown from the start,” says Richard Brubaker, an American environmental entrepreneur in Shanghai. To them, the green-tech “race” is not one that one side wins and the other loses, but a scenario where partnerships are sought out and the final equation doesn’t have to be a zero-sum game.

“For now at least, there is a great symbiotic relationship with California and the east coast of China on green technology,” says Linden Ellis. “Where California has the know-how, the technology, the universities and programs dedicated to developing technology, people who are interested in piloting it on a very expansive scale, or trying new combinations, often seek out research partners in China.” Similar partnerships can exist even when the focus shifts from research to commercial activity. Kevin Czinger, the CEO of a Santa Monica-based electric car company that partners with a Chinese battery company, noted in a New Yorker article that if the U.S. would stop feeling threatened by China’s progress on clean technology, it might begin to recognize its own strengths in this field.

It is telling what is left out of the increasingly dominant “U.S. versus China” green-tech “race” narrative. For starters, there are a lot of other countries at work developing green-tech and becoming significant green-tech markets — the low-carbon future, after all, isn’t solely a G-2 aspiration. Yet because the politics are different (there’s not the anxiety of the reigning superpower nervously eyeing the new kid on the block), the green aspirations of any country not named China are viewed through an entirely different prism by U.S. commentators. Germany, for instance, is home to the world’s top two solar manufacturing companies. Yet we don’t read headlines about Old Europe “cleaning our clock” to the 21st century.

“You haven’t seen this green-tech race raised over last 10 years while the Europeans have been innovating in this space more than the U.S.,” says Charles McElwee, an international environmental lawyer for Squires, Samson, and Dempsey based in Shanghai, “although that would have made more sense [than a U.S. versus China frame].”

Even as China’s solar panel exports grow, it continues to purchase clean locomotives from an American company, GE. Germany has developed world-class “green” metro cars, with China being a top customer. And French companies are among the world’s top innovators in water solutions. In other words, green-tech encompasses a lot more than windmills and solar panels — and progress in developing it can be a two-way street.

Should The United States Fear a Greening China?

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Christina Larson is a journalist focusing on international environmental issues, based in Beijing and Washington, D.C. Her reporting has brought her throughout China, as well Southeast Asia, and her writing has appeared in The New York Times, International Herald Tribune, The New Republic, The Washington Monthly, and Foreign Policy, where she is a contributing editor. She is a fellow at the New America Foundation.

© 2010, Yale Environment 360. All rights reserved. Do not republish.

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Author: Yale Environment 360 (30 Articles)

This post originally appeared on Yale Environment 360. Yale Environment 360 is an online magazine offering opinion, analysis, reporting and debate on global environmental issues. The site features original articles by scientists, journalists, environmentalists, academics, policy makers, and business people, as well as multimedia content and a daily digest of major environmental news. Yale Environment 360 is published by the Yale School of Forestry & Environmental Studies and Yale University. It is funded in part by grants from the William and Flora Hewlett Foundation and the John D. and Catherine T. MacArthur Foundation.

  • Ferd

    Another barrier for China to overcome before they can “win” a green energy war: their poor quality control. Our experience is that much of the Chinese made hardware is dead upon delivery, or does not hold up very well. IF the U.S. Government is willing to subsidize green hardware manufacturing like the Chinese Government does then at least it should be a fair fight.

    • Tamza

      That (quality) will come in time. Remember when Japan was considered poor quality? Taiwan was? Korea was? Well now it is China’s turn. The MAIN issue is the underlying economic and industrial policy of the US; in fact also the incentives provided to “create jobs” without regard to the TYPE of jobs. We DO NOT need assemblers and installers, we need MANUFACTURERS. Teach me HOW to fish…. Manufacturing jobs will be more durable.

  • http://communityanalyticsca.blogspot.com Peter Burgess

    Dear Colleagues
    A good article … but the US and others will lose if the decision making is based simply on how much GAAP money type profit is going to be made. The US and other money optimizing decision makers have gutted the infrastructure of everywhere they can reach … and show no indication of changing behavior now that they have survived the 2007/2008 wake-up call. Money quants … and the academics who taught them … do not understand value, and it will be too late when they do the rethinking and resetting that will have to be done eventually,
    Peter Burgess
    Community Analytics (CA)

    • Tamza

      Very well said. This ACCOUNTING perspective, and short-term ‘stock market performance’ obsession will be the ‘death’ of the recovery of the US.

  • Jeff

    Nonsense article.

    China doesn’t make Airplanes because it chooses not to invest many $B in R&D and production infrastructure for an uncertain, decades hence and likely small ROI.

    Green Tech is not comparable. To say that the US has the best Education and People, and to hold up the Valley as an example says the Author hasn’t been to either China or really looked closely at San Jose lately.

    China will make an ROI decision on what to build, period. Don’t worry about the technology, if they want it, they can get it. Make no mistake about that.

  • http://www.vairex.com Ski Milburn

    The winner will be the country with the largest domestic market, and highest availability of the manufacturing inputs (capital, people and raw materials). Since WWII (and arguably before) that has been the United States, but with the emergence of China into the world, and green technology into the marketplace, that’s changed. There’s no race for us to lose here, because we’re not even in it. We just have to learn to live with the consequences. In a few decades, Chinese politicians will talk about “Old America” but we’ll have a higher quality of life.

    • Tamza

      A bit too pessimistic. Then why is most of Europe still a desireable place to live (excl UK)? Pecause they have a BALANCED policy re: manufacturing, social nets, defense. The US tends to go overboard and deals mostly with symptoms, not the underlying causes. It does NOT matter that our population is smaller; IF you have manufacturing DOMINANCE you can ‘rule’ the world, as the Europeans LITERALLY did for a few centuries.

  • Sam

    I think America should be afraid that China will bypass us in the green or other technology/manufacture areas. While the US is busy promoting in fighting, China is setting goals and making plans. Who would you back for a road race – a wealthy kid couch potato, or a more eager person who is training every day? This is a simple story in nearly every executive leadership book/DVD/article – if you don’t plan, you don’t have a plan. Lance Armstrong does not win the Tour by staying home – he rides his bike every day.

  • David Tulauskas

    It doesn’t matter if you characterize the US/China cleantech activities as a fight, race, or potential partnership. There will be none of them if there isn’t a sense of urgency in the US about the issues it faces and aligned government, business, and societal leadership. My concern about the article is that it makes it sound like we still have time to address the issues and align leadership. We should not try to allay the anxiety in Washington and we have already become complacent. One might infer from the article that the US has a decade or more until China addresses some of its internal barriers. Actually, they’re not barriers, merely speed bumps that just slow China down a little bit for a period of time. China is moving very face, and has the entire “cleantech” value-chain aligned and headed in the right direction. There might be a few weak links, but the support system (i.e.: the government) is there to continuely monitor, support, and strengthen them. Yes, American has Silicon Valley and some universities that students from all over the world want to get into. Unfortunately, they are not moving/evolving fast enough at this time to keep US in the fight, race, or partnership. America needs a sense of urgency and needs to get its leadership aligned.

  • http://www.recyclematch.com Brooke

    The language of a race with China could finally be a messaging campaign for the green movement that would galvanize the masses who don’t see any urgency to engage in a greener, more sustainable approach to business. I don’t know that this debate has a clear answer at this point, and it can be particularly though to “know” the right answers given that the US corporations have such a massive global supply chain that reaches into China and other countries. To that end, there will be global cooperation from those who are aligned on objectives.

  • James Gray

    Good point, David. The sense of urgency is what’s lacking. Plus, our political system is broken. We have such a strong political faction that believes that the way the U.S. has been doing things is just fine, America is the greatest and always will be, etc. Just look now at how the senate is going to slowly kill the energy bill and the efforts to reduce greenhouse gases. Death by a million cuts due to excessive parochialism and an inability to act in the national interest.

    Drill baby drill!

    Also, another thing to fear is that since China is such a huge market for solar panels, wind turbines etc., they will be able to scale up like no other country can. As they build their energy infrastructure, they will likely skip over some of the technologies that are mainstream today (and which we are clinging to b/c it’s easy and cheaper in the short run), and build a big industry with the excellent economies of scale.

    Sadly our system is too paralyzed to put the conditions in place that would build these economies of scale as China is doing.

  • http://www.buildcheapsolarpanelsguide.com/ green diy energy

    This is a huge point, I wish I would have thought of this earlier.

  • http://robertstropicalparadisegarden.blogspot.com Robert Bornstein

    There should be no fears. The opposite is true. Competition leads to innovation. Greater involvement of many countries will hasten the greening of the world. Without the competition of the Japanese auto industy, we would still be using outdated technology and be producing gas guzzlers. Fear is usually out of lack of knowledge. “We have nothing to fear but fear itself.” Franklin D. Roosevelt.

    • Tamza

      Competition leads to innovation ONLY if you have the basic resources to do so. The US has been lagging/ losing those over the last many years. Only those of us who were engaged in innovation as the manufacturing shifted over could continue innovation. The NEW generation will not be ablel to. Methaphorically like the city kid who wondered how the milk truck produced milk!

  • Bo Varga

    I wish people would look at the facts, Competition does not lead to innovation if one party is given total government support while the other has to play in the “free market”. For example NO foreign firms are allowed into China water market which is exploding, something like 500,000,000 people are planned to get improved water delivery in next decade. We had to react to the Communists (BTW China is still legally a communist country and violence is routinely used, in fact government still charges families for the cost of the bullets used to execute enemies of the state) and Nazis, fear is not the issue. Being realistic that CCP (not Chinese people whose culture, hard work, and many individuals I know I really admire) is playing a WIN/LOSE game with US and rest of world, NOT WIN/WIN. Chinese Stimulus money is reserved for China ONLY, GE in wind, First Solar in thin film solar, etc. have technology that CCP wants, so they are allowed to sell in China until, like Google, they are bled dry of technology, will be interesting to see how long before they are frozen out.

    TOTALLY CORRECT to reserve US taxpayer money for US business and US workers – if Chinese companies want to build factories here, like the Japanese, then I support them getting whatever subsidies other US business gets, that is level playing field.

    Exporting manufacturing jobs to China from US is overt CCP goal, no reason to support that with taxpayer subsidies.

    If you live and work in US and have children and grandchildren you should work for and promote policies that help the US.

  • Barry Fitzgerald

    The fallacy that the author has ignored is that servicing, installing and selling goods made in China STILL sends all that money overseas with no returns. The flow is obvious, they send goods here, we send dollars there…..the only dollars coming back are loans to buy more Chinese goods. Free TRADE should mean bilateral trade, not license to kill economies.