Principal investigator: Viviane Pires Ribeiro
Paper Title: Who drives China's renewable energy policies? Understanding the role of industrial corporations
Authors: Wei Shen
Location of the Intervention: China
Sample Size: Not specified
Main theme: Environment, Energy & Climate Change
Main Variable of Interest: Renewable energy
Type of InterventionRenewable energy policy process
Methodology: Qualitative analysis
Using the wind and solar industries as case studies, Shen, W. (2017) argues that after a decade of rapid development in these renewable energy segments, a strong political community is forming, which largely controls and shapes China's renewable policy processes according to its preferences. Within this community, although direct confrontation with central government authorities is still rare in the authoritarian political tradition, major corporations have more room to negotiate the policy agenda, to confront external skepticism and criticism, and to ally with local governments to increase their influence in the policy process.
Evaluation Context
China's wind and solar energy sector has witnessed spectacular growth over the past decade. In recent years, for example, the country's total installed wind and solar power generation capacity has reached quite high levels. Meanwhile, the manufacturing capacity for renewable energy equipment has also witnessed enormous growth. Chinese companies have become world-leading manufacturers of solar panels and wind turbines and have acquired a significant share of global markets.
After a decade of massive expansion of investments in renewable energy and industrial capacities, government regulators no longer seem to be the only actors that matter in this sector. Instead, corporations, such as state-owned electricity companies, large investors in wind and solar farms, and leading manufacturers of wind turbines or solar modules, are gaining prominence in the political process. The rise of corporate power due to the enormous market expansion has significantly altered this state-led political process, leading to a new form of government-industry relationship.
Intervention Details
Unlike previous studies, Shen (2017) presents an alternative view of who drives China's renewable energy policy process. The study focuses on corporations and questions whether and how these actors can influence the formation or implementation of policies in the renewable energy sectors. In this sense, the author argues that these sectors consist of various interests among different bureaucratic and industrial segments, forming a tightly intertwined policy network where constant conflicts of interest and alliance-building efforts can be observed during their intense day-to-day interactions. These intra-state and inter-state industrial power dynamics are crucial to understanding who drives the country's renewable energy policies.
To address these complex dynamics, the article adopts a conceptual framework drawn from policy community (PC) theories. The aim is to reveal and explain how coordinated efforts were exerted by industry actors to guide or impede policy development and policy changes in China's wind and solar energy sectors. This research is a qualitative analysis based on intensive field investigations, stakeholder interviews, and document analysis. Eighteen formal interviews with government officials and industry professionals were conducted during several field trips to China between 2013 and 2015. In addition, over 100 formal policy documents, plus a large number of media reports and literature covering the period from 2005 to 2016, were analyzed as supplementary data to the interviews.
Methodology Details
Using the wind and solar industries as case studies, Shen (2017) establishes a conceptual framework for analyzing the relationship between the state, industry, and the influence of corporate policy on China's renewable energy policy subsystem. The authors then provide a historical account of the emergence of leading companies and explain their efforts to foster a policy community alongside regulators. The emergence of the policy community in the country's renewable energy sectors is presented with particular reference to the relationships between companies and central state regulators.
Subsequently, the dynamics of local government-industry are examined. The main argument is that the successful implementation of renewable energy policies does not depend solely on the tradition of 'command and control', in which orders from Beijing are taken by provincial leaders and then passed on to county or village bureaucrats. The traditional vertical decision-making chain of governance has been influenced by the increasing involvement of corporate actors who wish to see their investment projects efficiently implemented across multiple locations.
Results
Shen's (2017) analysis shows that most previous studies on China's renewable energy development have focused on the 'powerful central state' as the main contributor to China's impressive achievement as a world leader in building its wind and solar technology and electricity generation facilities. His main arguments are that it was the political elite of the party-state that selected the renewable energy industry as a strategically important sector for national economic and social well-being, and it was state officials who created the supporting policies that ultimately stimulated technological catch-up and market expansion. Therefore, the country's renewable energy development success story is often considered a good example of the advantages of 'developmental states' that often emphasize the production side of the economy and adopt a coordinated, state-led approach to promoting economic development and technological transformation.
After a decade of rapid expansion, the main policy stakeholders are concentrated in the hands of a few bureaucrats, investors in wind and solar farms, and manufacturers of wind turbines or solar panels. Frequent negotiations and communications can be observed between these actors, who have the capacity to initiate and shape renewable energy policies. The main objective of the CCP's policy is the continued expansion of wind and solar farms as its strategic preference. To achieve this objective, the CCP has an established platform for information sharing, enabling it to successfully redefine and defend the narrative of renewable energy as a politically and economically crucial industry with tremendous strategic value for China.
The successful implementation of renewable energy policies also depends on the increasing involvement of corporate actors who want to see their investment projects efficiently implemented across multiple locations. At the local level, key corporate actors are typically organizations such as state-owned energy companies, equipment manufacturers, and grid companies. Project managers, financiers, or engineers from these organizations work closely with local state officials on a daily basis. Due to their lower official or corporate status, their roles in the policy process have often been overlooked in previous studies, but they are crucial gatekeepers who possess significant power to shape the outcome of central policies through daily coordination, negotiations, and confrontations, often revolving around individual projects.
Lessons in Public Policy
The main finding of the study conducted by Shen (2017) is that influential corporations, such as leading manufacturers of wind turbines and solar panels or state-owned electricity companies, have played a significant role in the renewable energy policy process, framing strategic preferences and policy priorities, negotiating and coordinating with state actors at both the central and local levels. Therefore, in the domain of Chinese climate governance, instead of a traditional perception of a state-led governance mode where state officials are often considered the only crucial actors to guide climate-related policies, the study reveals that the government's autonomy in policy is increasingly constrained by the growing industrial interest groups that possess considerable resources and institutional power within China's renewable energy policy subsystem.
Two theoretical implications can be drawn from the study. First, the rise of the political community and a more active role for corporations in the political process does not signify a weakening of the state. Inclusive capabilities would ultimately empower all members of the Communist Party, both state and non-state, to achieve more effective institutional arrangements. Second, it rejects a static view of the Communist Party, since power struggles observed within or outside the Communist Party can constantly shape political orientations and even divide existing coalitions.
The empirical implication of such a power dynamic is enormous, as it would affect the future of the renewable energy sector in China. One of the distinctive characteristics of the Chinese renewable energy sector is that the main developers of wind and solar farms, such as state-owned utility companies, often also invest in fossil fuel projects and, consequently, belong to other interest groups that may oppose renewable energy. Currently, the renewable energy sector faces little pressure from traditional energy sectors only because it is currently a complementary and lucrative market. This situation would change significantly if the renewable energy market continued to grow and eventually confronted the existing fossil fuel industries head-on. It is almost certain that a new power configuration among key players would emerge, leading to new coalitions replacing existing ones.
Finally, China's renewable energy sector may be a special case in terms of the cooperative and inclusive nature of its state-industry relations. Therefore, its compatibility with the PC framework may not be applicable elsewhere. This is mainly because renewable energy is a newly emerging but rapidly expanding industry, so cooperation is crucial for both relatively inexperienced regulators and market participants to avoid mistakes. In this way, China's renewable energy sector, even as a special case, can still add value in understanding the complex and rapidly changing state-industry relations in China's reform era.
References
Shen, W. (2017). Who drives China's renewable energy policies? Understanding the role of industrial corporations. Environmental Development, 21, 87-97.
