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Institutional and Economic Support for Renewable Energy Companies in China and eu Member States: Conflicting or Cooperative Industrial Policies?

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This research examines the photovoltaic (pv) industry, which is the fastest growing source of renewable energy, as an example in order to illustrate the development history, the status of cooperation and conflict between eu and China, and to explain the reasons behind the phenomenon. The photovoltaic industry both in China and eu experienced a period of rapid growth before the international financial crisis, driven by the explosion of the pv installation capacity and pushed by supporting policies for solar energy in eu member states and other developed countries. After the international financial crisis and Europe’s sovereign-debt crisis, because of the cut off of subsidies for solar energy in eu member states, the supply and demand relationship in the pv market was reversed. There was a serious excess capacity throughout the world and a subsequent trade war between eu and China in 2012. China and the eu have different comparative advantages. The eu is good at pv technology, producing the equipment used in pv factories and has management experience relating to the running of pv electricity systems, while China is good at manufacturing pv modules at low cost due to its innovative manufacturing in the global value chain. If the China and the eu combine these benefits, they can achieve a win-win game: China could produce renewable products more efficiently and with low environmental pollution and it could improve its management of pv electricity systems; at the same time, the eu could get low prices and high quality pv modules and reach its renewable energy targets more easily.

Affiliations: 1: Institute for Industrial Economics at the Chinese Academy of Social Sciences (IIE-CASS)


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