Clean Energy Innovations Hampered By Policies

With a new round of Strategic Economic Dialogue between the United States and China looming on the horizon, US Commerce Secretary Gary Locke will be heading up a trade mission to China, during which clean energy technology is likely to take center stage. Locke has openly expressed his concern regarding China’s policies regarding its potentially vast clean energy market, in which local technology and innovation are favored, giving Chinese manufacturers an advantage over foreign rivals in the rapidly growing market of energy-efficient technology.

While acknowledging that Beijing has had made some concessionary changes in favor or foreign firms, Locke points out that the implementation of these concessions varies dramatically in their effectiveness at local and provincial levels. It appears that intellectual property protection is particularly susceptible to abuse, with one of China’s directives being used as an example, where it stipulates that in order to be included in its government issued procurement catalogue, high-tech goods must contain Chinese intellectual property – effectively excluding foreign firms from the government procurement process. In a survey carried out by the American Chamber of Commerce in China, it was revealed that US firms saw their biggest challenge in doing business in China as being the government’s “inconsistent regulatory interpretation”.

Locke has further been quoted as expressing his apprehension that China’s stance on foreign business could be perceived as hostile, which in turn may limit the country’s access to beneficial innovations. A recently introduced governmental policy in China stipulates that it will only buy products that result from R&D carried out in China. As the majority of innovators operate within their own countries, this policy excludes them from tapping into the Chinese market.

These issues have been gaining momentum in recent months and will no doubt be on the agenda at the high-level talks taking place in Beijing next week between US and Chinese representatives, where strategic, long-term and global issues faced by the two countries will be discussed in depth. Chinese Vice Premier Wang Qishan and State Councillor Dai Bingguo will represent Chinese interests, with US Secretary of State Hillary Clinton and Treasury Secretary Timothy Geithner representing the interests of the United States.