This project examines China's institutions and policies for promoting the acquisition, development, and diffusion of small-scale solar PV and grid-connected wind turbines. The work  focuses particularly on ways that China's technology management system can adapt to economic liberalization and decentralization.  This includes, but is not limited to, changes in technology management culture itself.  A questionnaire survey and structured interviews were administered to experts at manufacturing firms, research institutes, and government offices.  The questionnaire and interviews focus on differences between Chinese and foreign products in quality, price, and market share, on the size of the current market, and on what the Chinese government can do to improve development and promotion of domestically-produced products.  

In the PV market, China has six manufacturers.  All are state-owned and all offer old technology at non-competitive prices.  Tariffs on PV imports haven’t helped promote the domestic industry because smuggling is common.  Further, the PV factories can’t be easily privatized because their cost structure is too high (they have at least twice the employees that they need), and their production lines outdated.  PV systems are marketed through energy service companies.  Incentives and marketing strategies used by these companies are currently being studied.

Manufacturers of wind-connected wind turbines are burdened by high unit costs and a monopsony market.  The state power company, which owns its own generators, has purchased very few wind farms.  Currently, most installed wind generators are foreign-made, even though the price of foreign-supplied turbines is greater than that of domestic turbines.  Wind farm managers are willing to pay a premium for high reliability and quick repair service. One very interesting feature of the survey results is the nature of the recommendations elicited from experts for enhancing the growth of domestically-produced PV and wind-turbine systems.  Most of these recommendations involve command-and-control measures or subsidies, rather than market-based measures.  Thus, advice being provided to Chinese leaders by technology experts lacks an economist’s perspective, and may perpetuate the non-competitive status of China’s renewable energy industries.

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