China's great wall to foreign green tech
Protecting domestic firms from foreign competition in alternative energy only hurts efforts against global warming.
When China's ruling Communist Party tells the energy industry in the world's largest controlled economy to "go green," the world can cheer. At last the largest emitter of heat-trapping gases is starting to make a contribution toward curbs on global warming – short of actually setting official limits on carbon emissions.
But the world should not cheer China as it tries to protect its domestic green-tech industries from foreign competition.
Foreign makers of solar panels and wind turbines are now often excluded from contracts for government projects in renewable energies. A recent "buy Chinese" policy has pushed out many foreign makers of wind turbines, for instance, in favor of local manufacturers.
In many other ways, China is putting up trade barriers in an attempt to create export giants in these new technologies. The strategy is modeled on Japan's success after World War II in keeping foreign competitors out of the domestic car and electronic markets while building up export behemoths.
But with clean energy, China has a big role to play in solving a critical global problem. Such technologies should be treated differently from other industries.
Yes, the renewable-energy industry will likely be the next big jobs producer as the world tackles climate change. But because much of this industry still relies on subsidies to be competitive with fossil fuels, it is still not a true free market. It will need the invisible hand of global competitiveness and the legal exchange of technical know-how (not a pirating of patents) to become more competitive.
And to reduce the use of coal and oil more quickly, every country, especially China, needs to adapt the best technology at the best price. Protectionism works against that shared goal.
Subsidies for renewables, while sometimes necessary to kick-start these new technologies, often distort the market and create unexpected costs. A few European nations have subsidized their solar or wind industries at tremendous cost to consumers and taxpayers.
China must abandon its communist and mercantile approach to controlling green industries – as should other countries that are similarly tempted.
A global industry that sprang up to help solve a global problem should remain global, and not be walled in.