By Julian Wong Jul.31.2010
In: coal, collaboration, innovation
1 comment

China's Innovation Model and its Role in the Global Clean Energy Market

This is slightly dated by now but I want to be sure this is posted for posterity’s sake.  In mid-May I participated in a panel discussion at the China Environment Forum at the Wilson Center here in Washington, DC.   The topic of discussion was “Decarbonizing King Coal: Growing U.S.-China Clean Technology Cooperation”, and my fellow panelists Ming Sun of Clean Air Task Force (pictured right) and Albert Lin representing Future Fuels, LLC (pictured left) had very interesting perspectives on the role of “clean coal” in China’s energy future.  (And that’s me in the center of the pic.) The focus of my presentation was to provide a more macro look at China’s innovation capacity in clean energy technologies.  The whole sessions can be accessed at this archived webcast.

For the convenience of readers, I am pasting my presentation outline (as prepared, but not necessarily delivered) here:

I’m looking forward to hearing my fellow panelists, who really are the technical experts on the subject matter at hand, and so I hope to keep my remarks relatively brief.

My goal is to set some context for our discussion today on science and technology cooperation between the US and Chin, particularly in the clean energy space, by making some observations on the state of innovation capacity in China today.

I’d like to start off with a quote by Premier Wen made last September at the World Economic Forum.

“We should see scientific and technological innovation as an important pillar and make greater effort to develop new industries of strategic importance. Science and technology is a powerful engine of economic growth . . . We will make China a country of innovation. . .We will accelerate the development of a low-carbon economy and green economy so as to gain an advantageous position in the international industrial competition.”
- China’s Premier Wen Jiabao at the World Economic Forum, September 10, 2009.

1. Not surprising, nor anything new.

a. China used to be the cradle of innovation. It invested the compass, paper, printing press and gunpowder.

b. Science & Technology is one of the Four Modernizations launched in the late 1970s during China’s reform and opening up.

c. Now, Science & Tech as a modernization movement meets the sustainable development imperative through Hu Jintao’s “Scientific Development” concept.

d. Different kinds of innovation – Without getting too much into a business school course on innovation theory, I would like to bring up one category of distinctions, that of incremental innovation versus radical innovation.

e. It is mportant to recognize where Chinese innovation strengths are. In China’s case, it tends more towards “Incremental”: The classic Chinese model is import-digest-reinnovate

a. E.g. solar China versus US

2. The times of one-way technology transfer is over. China is an emerging leader in the exports of energy technologies – solar PV, hydropower, high speed rail, UHV, and now coal gasification

a. Seems to have a well-thought out innovation strategy

b. In the medium-to-long term plan for Science & Tech, includes benchmarks for patent generation, scientific publication

c. National R& D programs such as 863, 973, Key Technologies Program, Spark, Torch, etc.

d. Not clear if the 150 or so national high tech zones or science parks are resulting in substantive innovation work, or just low-cost manufacturing clusters

e. Creation of domestic clean energy market is attracting all sorts of foreign R&D capabilities, e.g. Applied Materials, DuPont, Novazymes, IBM

3. But big challenges to innovation in China remain

a. Hard to monetize innovation, solar and US vs. China as an example

b. A relentless approach to bring down the cost of a new technology has come at the expense of quality. Culture of rewarding the lowest bidder à “cutting corners”.

c. Absolute amounts of R&D still small. 1.5% of GDP in R&D, cf. US at 3% or Japan at 4%; aiming for 2.5% by 2020

d. In the private sector, still perceived as as a cost. Need to promote more SME access to financing to unlock innovative capacity of the private sector

e. “Indigenous innovation” policies raise the ire of foreign trade partners, but the Chinese seems to be moving back on this

f. IPR concerns means that the most innovative foreign technologies don’t come close.
4. Technology cooperation and codevelopment is essential. Lots of benefits, and clean energy opportunity is larger than any one country can dominate.
5. But technology is not everything. Systemic and design change. Market development. Data gathering and analysis capacity. Lifestyle.

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Comments (1)

  1. Yingni Lu Aug.13.2010@6:42 am Reply

    Interesting and insightful article. I agree with the incremental technology point. Obviously China is famous for import-digest-reinnovate, which doesn’t earn much good reputation for us. However, I’d say this method is more suitable for improvement in manufacturing. Our education doesn’t teach us how to do industrial design, which is very important to take ‘reinnovate’ to the next stage and the missing link in Chinese R&D culture. I study innovation management as my MBA subject in Imperial College. I can tell you how important it is for innovators to protect their IP and so many of them gave up the huge market opportunities in China because of IPR infringement. Probably that is something that we really need to think about.

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