Thursday, September 9, 2010

Is China "skirting the rules" on clean tech support?

Maybe, maybe not, but I think there's a far more important story here.

There's a great article by Keith Bradsher in today's New York Times, "On Clean Energy, China Skirts the Rules". Bradsher compares the extent to which clean tech firms in China and in the US receive government support. The upshot of the article is, as has become de rigeur recently, to paint a picture of a China that is getting ready to clean America's clock (pun intended).

Bradsher quotes the CFO of a US-based clean tech company on difficulties:
"You can’t get a penny in the United States, it doesn’t matter who you call — banks, government. It’s awful," he said. "Therein lies the hidden advantage of being in China."
Then he closes with this quote from the head of a Chinese tech company with operations in both China and the US:
"Who wins this clean energy race," Mr. Zhao of Sunzone said, "really depends on how much support the government gives."
Beijing-based lawyer, Stan Abrams, adds some illuminating commentary on this story at his blog, China Hearsay. He looks at it from more of a legal standpoint and concludes that, though China does appear to be skirting the rules, little to none of its behavior appears to be in gross violation of China's WTO commitments.

My sense is the recent rash of "China is kicking America's ass in clean tech" articles is really more about prodding the US government to take a larger role.

What concerns me is, if those who promote such views get their wish for more US government involvement in industry, would the US government know where to draw the line?

At some point government support in the US (and elsewhere) starts to result in diminishing returns. Once you unleash the state, it's hard to put that genie back in the bottle. Once you put in place a new bureaucracy, the people inside it begin immediately to plan for a perpetual existence.

During a recession, it becomes easy to clamor for government help, but when conditions improve, how likely is the government to withdraw?

This, to me, is a fascinating difference between the Chinese and US systems. We know that, over time, democracies bulk up with special interest driven programs that beneficiaries will fight for to the death, and that the rest of the population rarely have the collective will to fight.

On the other hand, China's "special interests" are all pretty much contained within the Politburo. They fight, someone wins, then they move on.

All the hand-wringing about whether the US should help with clean tech, though important, seems to be missing the much broader point (though raising the vital question) of whether the political system that has served the US well for over 200 years is sustainable in its current form.