As China dominates the world of clean energy, US protectionism ‘neoliberalism fails’
The New York Times diagnosed the US as a ‘failure of neoliberalism’ due to protectionist trade in the clean energy industry’s dominance of Chinese manufacturing.
As the United States and the West, which pushed for a rapid single global free market economy in the 1970s oil crisis, lost out to China, which developed a clean energy foundation with a national industrial system, the NYT diagnosed on the 27th that it was a ‘victory for the national industrial system’ in the opinion of experts.
“China’s dominance of a major global manufacturing sector demonstrates the potential and power of the country’s industrial policy,” said Jennifer Harris, a former adviser to President Biden and director of economic and social initiatives at the William and Flora Hewlett Foundation. “Was it successful? Of course.” told the NYT.
“The United States has long lacked a broad industrial policy and a coordinated strategy,” said Joseph Stiglitz, an economics professor at Columbia University. “Even the Democratic Party was afraid of taking a more active government role. I think this was a big mistake that could have long-term repercussions.” “I do,” he told NYT.
In the view of some Chinese economists, complaints about unfairness in the United States and Europe are a sign of their own government's failure.
“The West’s decision to pursue neoliberal economic policies was a strategic mistake. It led to the deindustrialization of the economy and provided an opportunity for China,” said Zheng Yongnian, a professor at the Chinese University of Hong Kong. China talked about industrialization and government-led development in the midst of the market craze.
Currently, no country on the international stage can match the scale and tenacity of China's industrial support.
The International Energy Agency (IEA) said that China accounted for 85% of global clean energy manufacturing investment in 2022.
NYT said, “Now the United States, Europe and other wealthy countries are trying frantically to catch up,” adding, “Hoping to correct past industrial policy mistakes and learn from China’s success, they are massively subsidizing their own companies.” Meanwhile, efforts are being made to block competing Chinese products, and the IEA announced that China’s investment in new clean energy plants last year fell to 75%,” he said, explaining the background for the 10% drop.
Due to concerns about oil shortages and climate damage during the 60-year oil crisis, governments around the world have various policies to invest in alternative energy sources.
In late 1970, Democratic President Jimmy Carter installed solar panels on the White House roof as a symbol of his commitment to solar energy development.
Japan launched a groundbreaking subsidy system in the 1990s to allow homeowners to install solar panels.
In the 2000s, Germany developed an innovative program that ensured that the country would make a profit by selling electricity to consumers who adopted solar energy systems.
In the United States, in 1980, the Republican hard-line conservative Reagan regime strengthened neoliberalism in the East-West Cold War, the military industry led the economy through free trade and the expansion of the global single market, and military expansion led the economy, and President Carter's White House solar panel was removed.
Regarding the West's problems, the NYT said, "China's industrial dominance is underpinned by decades of experience using the power of the one-party state to pull all the levers of government and banking while encouraging frenzied competition among private companies. “China’s unrivaled production of solar panels and electric vehicles is based on the early development of the chemical, steel, battery and electronics industries and large-scale investments in railways, ports and highways,” he said.
China spent 1.7% of its gross domestic product (GDP) on industrial support from 2017 to 2019, more than twice the rate of other countries.
China's industrial support spending included low-cost loans from state-owned banks and cheap land from local governments. From the beginning, there was little expectation that these supporting Chinese companies would make immediate profits.
The United States and European countries have now countered with tariffs, accusing China of circumventing international trade agreements, engaging in intellectual property theft and willingness to practice low-wage forced labor.
In a press release on the 16th, the White House said President Biden and European heads of state are criticizing China more actively for the way they intentionally subsidize excess production and then dump low-cost goods into other countries.
China denies ‘violating trade rules’ and claims that China’s enormous industrial capabilities are a sign of its success.
At a meeting with European leaders, including French President Macron, on the 6th, Chinese President Xi Jinping said, “China has increased the global supply of goods and alleviated international inflationary pressures, while also helping the world fight climate change.”
China is well-positioned to supply low-cost electric vehicles, solar cells and lithium batteries to rival countries as consumers in Western countries increasingly turn to green technologies.
Gregory Nemet, a professor of public policy at the University of Wisconsin and a researcher in the global solar energy industry, told the NYT, "If you grow to a large scale like China, an enormous economy of scale becomes possible."
In China, as clean energy investment led to overcapacity and the profitability of Chinese companies fell, the Chinese government was willing to take losses.
President Biden and European leaders have decided to develop their country's manufacturing capabilities in advanced technologies such as semiconductors, electric vehicles, and batteries.
Accordingly, the NYT stated, “Biden and Europe’s policy is partly to adopt some of China’s tactics to foster the industry.”
The acceptance of industrial policies for clean energy by the United States and the West appears to be a radical departure from the ideology of ‘open free market,’ ‘small government,’ and ‘minimum government intervention’ held by the United States and its free market allies.
“Excess production capacity threatens the viability of companies around the world, including in emerging markets,” U.S. Treasury Secretary Janet Yellen said at the G7 Finance Ministers’ meeting in Italy on the 28th.
The G7 Finance Ministers' meeting warned against introducing protectionism into the competition of latecomers, saying, "If we want to catch up with China in competition, we must adjust protectionism and subsidies" for the United States and Europe to dominate key industries.
Secretary Allen publicly warned of the 'China risk' in Germany on the 27th, saying, "The United States and Europe must work together to counter China's excessive industrial capacity," and "A wave of cheap Chinese exports will pose a serious threat to the global economy." .
In a speech at the University of Frankfurt, Secretary Yellen revealed the main topic of discussion at the G7 finance ministers' meeting and said, "China's industrial policy may seem distant as we sit here, but if we do not respond in a strategic and unified way, it will affect the two countries' “The viability of businesses around the world could be at risk,” he said.
Prior to the G7 Finance Ministers' Meeting, President Biden announced a policy of increasing tariffs on some Chinese imports, including imposing a 100% tax on electric vehicles.
On this day, the White House officially abolished the tariff policy on Chinese products worth more than $300 billion, which was the policy of the Republican Trump administration.
By introducing a united front with the United States and Europe, they denied accusations of ‘anti-China policies’.
The Biden Democratic Party system is entrusted with the role of ‘convincing China’ that China’s largest trading partners, Europe, are erecting trade barriers to protect Chinese electric vehicles, batteries, and panels from dominating the Western market.
On this day, Secretary Yellen said, “The United States is not trying to pursue an anti-China policy,” and said, “China’s actions pose a threat to the global economy, so a coordinated response is needed,” as an international response.
Secretary Allen pointed out that China's dominance of clean energy technology and other sectors could "prevent countries around the world, including in emerging markets, from building industries that can fuel growth," adding, "Emerging country damage." The scope has been expanded.
Neoliberalism excluded major security-related industries from the market economy and maintained the view that the United States ‘knows best’ as the world’s single, always free market.