en years ago, one could find almost all the Nike shoes labeled as “made-in-China”, but today the word “China” is replaced by “Vietnam”. China is going through immense transitions. Its competitive advantage of cheap labor is gone. Its investment is slowing down to the extent that the export sector hit a record low in the past few months. Despite of all this, China still remains a voracious consumer of energy. While the exteal energy environment remains highly volatile, China needs to focus on its inteal renewable energy as the cure to transitional challenges.
China’s heavy investment in renewable energy enhances the country’s energy security. The falling oil price will not change China’s investment strategy in renewable energy. Why? Because the Chinese are sick of air pollution. They can hardly see the buildings across the street in the moing. In 2013, an eight-year-old Chinese girl was the youngest person in China and possibly in the world to be diagnosed with lung cancer associated with air pollution. People want to see clean energy sources that can replace fossil fuels.
Moreover, renewable resources are less dependent on energy prices. Therefore, as China relies heavily on energy imports to support its growth, it can use its renewable energy as a buffer against fluctuations in global energy prices. Renewable energy will enhance China’s bargaining position in the global energy market. In addition, with advanced technology, the cost of renewable energy production falls drastically. Thus, renewable energy will enhance China’s inteal energy strength as well.
Strategically, China needs to find its niche as a leader in renewable energy. China cannot compete against countries well endowed with fossil fuels for energy exports. It is unable to compete against the U.S in shale energy in the short term. As a rising power, China does not want to lose its position in the energy race.
Therefore, renewable energy is the solution. This is clearly demonstrated through the 2014 joint announcement with the U.S, in which China emphasizes ambitious renewable energy goals. Along the way, China can also replace its name as a “copycat” to a true innovator. Thus, renewable energy will aid China’s transition from an investment-based economy to a consumption-based one. According to Jeffrey Sachs’ theory on the stages of development, China is incrementally shifting away from the industrializing stage to the knowledge stage where the economy is based on skilled labors. Most developed nations that take this path remain competitive. As the number of skilled workers increases, society will become more aware of environmental protection. This will create demand for further renewable energy investment.
At the same time, as China reaches its Lewis tuing point where its labor cost becomes uncompetitive, we will see transitions in China’s employment opportunities from traditional energy sectors such as coal to clean energy sectors such as solar and wind. Based on the IEA’s prediction, China’s wind energy is expected to compete against conventional energy technologies and meet 17% of the electricity consumption in the next decade. Most of the wind energy is located in weste China where it is significantly underdeveloped. As a result, there will be rising employment opportunities from traditional power plants in coastal regions to renewable sites inland. One can expect employment shifts the Chinese economy in the energy sector towards “green” and “smart” innovation.
When you multiply a change by 1.3 billion people, even the most miniscule change can determine the future of China. We have witnessed China’s innovation in renewable energy technologies. For example, four Chinese wind turbine manufacturers are listed among the world’s top ten in the wind turbine manufacturing sector. Meanwhile, China has invested in building smart cities that incorporate electric vehicles, smart grids, and low-carbon communities. Indeed, transitions create millions of possibilities. In the next 10 years, don’t be surprised to see most of the wind turbines in Califoia labeled “made-in-China” instead of “USA”.
Sophie Site Jia is a student pursuing her Master’s degree at NYU’s Center for Global Affairs.