TIANJIN, China — China vaulted past competitors in Denmark, Germany, Spain and the United States last year to become the world’s largest maker of wind turbines, and is poised to expand even further this year.
China has also leapfrogged the West in the last two years to emerge as the world’s largest manufacturer of solar panels. And the country is pushing equally hard to build nuclear reactors and the most efficient types of coal power plants.
These efforts to dominate renewable energy technologies 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.
“Most of the energy equipment will carry a brass plate, ‘Made in China,’ ” said K. K. Chan, the chief executive of Nature Elements Capital, a private equity fund in Beijing that focuses on renewable energy.
President Obama, in his State of the Union speech last week, sounded an alarm that the United States was falling behind other countries, especially China, on energy. “I do not accept a future where the jobs and industries of tomorrow take root beyond our borders — and I know you don’t either,” he told Congress.
This is a very good step for China in the long run, as they continue to move away from basic manufacturing to more complex products. Furthermore, as long as most of the energy equipment does not carry the tag "designed in China" or "dreamed up in China" this advance poses little threat personally. It is too late for protectionism when it comes to China and although this poses many challenges to wages and benefits of certain U.S workers in the short run, it screams of opportunities for U.S. companies to offshore and prosper. At bottom, relying on China for cheap imports has saved the U.S. consumer since the mid 1990's upwards of $600 billion dollars.(Forbes) These savings have allowed the Fed to hold down interest rates, and allow businesses to gain more capital to invest in new innovations. All in all, China cannot dominate everything and in order to avoid further loss of economic power and influence we will have to develop new business models that allow the U.S to get the best out of China and cushion them from the worst.
ReplyDeleteI would like to highlight some points from the article. First of all, the dependence of on fossil fuels has caused many economic bad times through out the world over the last few decades. Even before the recent recession the overheating in the oil industry has caused the cost of crude oil to rise almost $200/barrell. In such consequences, China's move to shift the equilibrium of the industry by engaging new renewable energy is quite appreciatable.
ReplyDeleteThen again, the rising of new industries is causing new employment and thus more GDP. Chinese interest rate is as low as 2% which is low compared to many coutires. All these factors as a whole makes this investment a wise decision China could take.
Chinese residents need to pay the price for the usage of clean energy. China's commitment to renewable energy is expensive. Although costs are falling steeply through mass production, wind energy is still 20 to 40 percent more expensive than coal-fired power. Solar power is still at least twice as expensive as coal. The government charges the fee to all electricity users. The price of electricity has increased a lot for residents, which will further affect those low income families.
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