Summer of Research

This summer has been jam-packed with research. I have been working full-time as a research assistant at The Institute for the Theory and Practice of International Relations since June. Our research team has been preparing to implement a survey on successful reform incentives in 120 developing countries. It will eventually be sent out to about 20,000 senior government officials, U.S. government officials in those countries, international organization representatives, NGO and civil society representatives, and anyone else who is relevant. And of course, I started my Charles Center research on the development of Chinese energy policy in May.

Since then, my research focus has become more specialized. Recently I have focused on examining the development of the wind power industry in China. As a quick backdrop, wind power in China (and in nearly every country) plays a small role compared to more traditional energy sources, and even to its fellow renewable sources like hydropower and solar power. In particular, China’s hydropower industry dominates other renewable sources. However, the Chinese government has made it clear that China’s renewable energy sector will become less heavily weighted towards hyrdropower.

What has interested me the most about wind power in China is the development of Chinese firms. A prominent domestic policy aimed at increasing “homegrown” innovation on the part of Chinese wind turbine manufacturers has been the implementation of a local content requirement. In 2005 “The Notice of Requirements for the Administration of Wind Power Construction” was passed by China’s National Development and Reform Commission (the powerful national macroeconomic planning body in China), which specified that 70% of materials used in manufacturing wind turbines in China must originate from China.¹

Many foreign firms subsequently moved their operations to China. Not only has this physically brought foreign technology closer to Chinese manufacturers, but it has also facilitated joint ventures between Chinese firms and foreign firms.

This local content policy is just one of several recent measures that have been taken to stimulate wind energy development in China. Another policy requires Chinese electrical utility companies to literally buy out all available renewable energy power, while another gives direct government funding to firms that are producing turbines with purely Chinese technology.

Like I said, I am interested in the Chinese manufacturers. How much are these firms learning to innovate and invent, and how much of the innovation is truly theirs? The past decade or so has seen amazing growth in Chinese wind energy thanks to huge investments by both the Chinese government and by foreign wind companies. When Deng Xiaoping opened up China in 1978, China’s economy began its surge, which has lasted for thirty years. The major drawback to China’s growth is usually cited as its heavy reliance on exports and relative lack of entrepreneurship (and I am being very general here). To me, the wind power industry represents a key sector that can provide insight on the progression of China’s national innovation system as a whole. Recently, newspaper articles like this have suggested that China has become the world leader in clean energy, and that may be so. But just as critics question the long term sustainability of China’s economy without a noticeable shift towards a more entreprenurial economic system, I too question the prospects of China becoming the leader in green energy without a clearly improved domestic innovation system. China is quite possibly already heading strongly in this direction towards a more self-generating economy.

Amidst all of the research this summer, I have been scrambling to prepare to live in Beijing for another year. I fly out in less than four weeks. Once in China, I have three and a half weeks to finish up my research project before starting full time Mandarin classes in Beijing. As of now, I am planning to head west and visit the Goldwind Science and Technology headquarters in Urumqi, Xinjiang. Goldwind is the largest Chinese wind turbine manufacturer with a 30% national market share. Though 55% state-owned, they also collaborate with several foreign firms, so I am hoping to have plenty of dialogues with professionals who can provide insight on inter-firm relations second to none.

Until next time,

Austin

¹ Thomas R. Howell, et al., “China’s Promotion of the Renewable Electric Power Industry: Hydro, Wind, Solar, Biomass.” Dewey & LeBoeuf LLP. March 2010 pp. 2-3.