China’s Green Tech Innovation

For years the West has relied on an old premise that innovation in technology will create new jobs, if not new industries, to keep our economy rolling. This belief softened the fallout from the off-shoring of our manufacturing base. We figured as long as we can keep inventing new products, we can outsource the production to a low cost area, and still maintain a high tech economy. As I said earlier, when you give up production of a product, you also give up the opportunity for innovation on that product, or at least the opportunity to innovate on the process of producing that product where small innovations can bring further efficiencies and even new products to market. Right now, energy is the problem in China and the government has committed all efforts to solving this problem by building coal, wind, nuclear, hydro, and solar power plants to address their energy needs. The might of the state is enormous – every week a new coal power plant opens in China! China is now the largest emitter of GHG’s in the world, but they are also the largest market for clean tech energies as well.
China’s twelfth five-year plan calls on the National Energy Administration (NEA) and the Ministry of Science and Technology (MOST) to research, develop, and finance clean technologies not only for domestic use, but also for export. It is estimated that the government funnels over $50 billion for R&D through these organizations alone.
This state-backed plan seems to be good news. First, the US and China are the two biggest polluters, accounting for 40% of emissions and 40% of energy consumption, so any plan to lessen the emissions in either country is a score for the earth and her citizens. Second, many large businesses will benefit through the partnerships formed with their Chinese counterparts. However, this creates a reversal from the prior paradigm of Western innovation being sold to emerging markets. It now would be the US clamoring for Eastern technology. This would have enormous monetary policy impacts as well as lead to a dramatic increase in the trade gap. While the US is in deadlock, with republicans refusing to touch defense spending and democrats refusing to cut entitlements, the only area of the budget that suffers is the discretionary spending side. Take a guess where the funding for education, technology, and research and development come from? In any case, as people live longer the global population is going to grow. As more and more countries develop, energy supply is going have to expand dramatically in order to keep up with the demand. Not only do we have to find new sources of energy, but we need to make products that use energy more efficiently. Now is the time for all of us to act – and this begins with innovation to the current technologies.