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China's new energy industry: a feast for others?
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15:59, August 27, 2009

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China moves to address overcapacity in emerging sectors like wind power

The new industry development plan which China will be unveiling covers new energy and new materials. Affected by policies that China is about to introduce to support the new energy industry, there are increasingly large numbers of newly founded enterprises in the new energy and related industries. At present, there are already more than 10 large-scale new energy bases.

China's new energy industry mainly consists of nuclear energy, wind power, solar photovoltaic, and biomass energy. However, due to a lack of core technology and core materials, lurking in the midst of the fast development of China's new energy industry is a deep crisis: the new energy industry could become someone else's feast.

How could this happen? Primarily this is because foreign countries control our core technology and core materials, thus China is in a passive position.

Here's a brief analysis of the new energy industry situation:

Nuclear energy
The core raw materials of nuclear energy are uranium. But China doesn't have many reserves and needs to import. Once the new nuclear energy industry grows into a large-scale industry, it will be easily controlled by others. In addition, nuclear technology is mainly controlled by developed countries in Europe and the United States.

Wind power
The electrical machinery technology in wind the power industry mainly lies in developed countries in Europe and the United States, especially the four Nordic countries (Norway, Sweden, Denmark and Finland).

At present the 2.0 to 3.0 megawatt-fans have become the mainstream models in developed countries in Europe and America. But the foreign fan manufacturing giants want to maintain its technology monopoly, and do not want to sell manufacturing technology of fans over 2.5 megawatts, or set up any joint ventures in China.

Therefore, the majority of Chinese fan manufactures purchase foreign companies' production license, and mainly produce models of 1.0 to 1.5 megawatts, significantly lagging behind other developed countries.

Solar photovoltaic industry
China's solar photovoltaic industry may have low level repetitive construction. At present, the biggest problem facing the photovoltaic industry is the purification technology of polysilicon and monocrystalline silicon, which has long relied heavily on imports from Japan and Germany. Even after Japan and Germany began to export silicon purification technology to China, China is still facing a bottleneck of "technology lease".

According to regulations, as long as China adopts similar process planning and manufacturing processes, it will be necessary to pay fees to the country which sells the technology. In other words, foreign technology will take away 0.1 yuan from one kilowatt-hour electricity generated by solar photovoltaic, and this does not include the costs of introducing technology and equipment.

Therefore, China has to give the matter further thought when launching support policies for the development of new energy industry (including new energy, new materials, etc.).

Moreover, China needs to make three major changes:

First, pay attention to basic theoretical research, determine the long-term direction of development from a strategic level, and make breakthroughs in the core technology.

Second, China should not over-emphasize the research in the field of application, but rather focus on support industrial restructuring, and it is necessary to support key enterprises in order to raise the overall industrial level.

Third, China needs to co-ordinate planning to avoid enterprises "crowding together" all over the country and avoid repetitive construction. To achieve this, technical barriers must be set, and China has to raise environmental standards, which are the main initiatives to control unchecked construction.

Only in this way can we develop China's new energy industry faster and better and avoid the new energy industry becoming someone else's feast.

By He Weida, professor at Economics and Management School of University of Science and Technology Beijing

By People's Daily Online

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