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Increasing Opportunities for Chinese Direct Investment in U.S. Clean Energy

Increasing Opportunities for Chinese Direct Investment in U.S. Clean Energy

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Chinese direct investment has great potential to expand the U.S. clean energy economy, create jobs, and advance U.S.-China cooperation in a positive and mutually beneficial way.
Chinese direct investment has great potential to expand the U.S. clean energy economy, create jobs, and advance U.S.-China cooperation in a positive and mutually beneficial way.

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Published by: Center for American Progress on Feb 11, 2013
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02/15/2013

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1Center or American Progress | Increasing Opportunities or Chinese Direct Investment in U.S. Clean Energy
Increasing Opportunities for ChineseDirect Investment in U.S. Clean Energy
Melanie Hart February 11, 2013
In Presiden Barack Obamas rs erm, economic issues were oen a source o ricion beween he Unied Saes and China, paricularly regarding clean energy. Bu hingssared o relaively well a ew years ago: Presiden Obama made his rs rip o China aspresiden o he Unied Saes in November 2009, and energy cooperaion was high on heagenda. Presiden Obama and Chinese Presiden Hu Jinao signed muliple agreemenspledging o cooperae on a range o imporan energy iniiaives such as he U.S.-ChinaClean Energy Research Cener and a U.S.-China renewable-energy parnership.
1
Tese iniiaives are imporan. Te Unied Saes and China are he world’s biggesenergy consumers and bigges greenhouse gas emiters.
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Our wo naions have similarenergy and climae problems bu dieren comparaive advanages or addressing hoseproblems. Te Unied Saes leads in cuting-edge clean energy innovaion, and Chinaleads in he rapid commercializaion and deploymen o hose echnologies. Working ogeher on clean energy jus makes sense. I U.S. and Chinese clean energy enerprises can have open access o boh markes, ha access will improve heir abiliieso achieve good economies o scale and drive down coss. I boh markes are compei-ive, ha will give enerprises in boh counries srong incenives o innovae, and inno- vaion will lead o new echnologies and new business models ha should speed ourransiion o a clean energy economy. Ta would be good or U.S. and Chinese consum-ers, good or our economies, and good or he plane as a whole.Despie hose macro-level incenives o cooperae, however, hings can ge a bi morecomplicaed when we acually delve ino he deails. Alhough we wan o cooper-ae a a macro level, he Unied Saes and China are also big compeiors a a markelevel. Boh counries wan o see heir own companies dominae in criical indusriessuch as solar and wind. Neiher Washingon nor Beijing is happy abou being oo reli-an on energy producs or services provided by oreign enerprises. Balancing coop-eraion wih compeiion and our respecive naional ambiions is always dicul, andclean energy is no excepion.
 
2Center or American Progress | Increasing Opportunities or Chinese Direct Investment in U.S. Clean Energy
 Alhough he Unied Saes and China expanded bilaeral cooperaion wih criical proj-ecs such as he Clean Energy Research Cener, hroughou Presiden Obama’s rs erm we increasingly buted heads in he rade realm. U.S. seel workers led a World radeOrganizaion peiion agains China’s wind-power equipmen subsidies in 2010; U.S.solar panel and wind urbine manuacurers led U.S. Deparmen o Commerce coun-ervailing duy peiions and anidumping peiions agains Chinese manuacurers pro-ducing hose same producs in 2011; and he American Superconducor Corporaionis sill engaged in an ongoing legal batle wih China’s Sinovel Wind Group over allegedinellecual propery he.
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Tese U.S.-China clean energy rade ricions are serious, and unorunaely hey areunlikely o disappear anyime soon. China’s regime o proec inellecual propery righsis sill developing. Some local ocials in China are sill more ineresed in proecing localcompanies han in adhering o inernaional rade laws, and China’s relaive lack o admin-israive ransparency can make he resulan rade complains very hard o resolve.One area in which he Obama adminisraion has proven especially adep, however, isapproaching he U.S.-China relaionship issue by issue wihou leting rusraions onone issue spill over and impede cooperaion elsewhere. As my colleague Nina Hachigianrecenly wroe, Presiden Obama has aken a clear-eyed, nuanced and eecive approach”oward China.
4
Where cooperaion makes sense, he presiden has been ready o deal. Where he eels American ineress are being harmed, he has no hesiaed o ge ough.Tis is exacly wha we will need more o in U.S.-China relaions in he clean energy sec-or. We need o coninue o keep an eye on clean energy rade o ensure ha Americancompanies have a level playing eld, bu rade ricions should no hold us back rompursuing promising opporuniies wih China in oher areas.One o our mos promising opporuniies or U.S.-China clean energy cooperaionis inward Chinese direc invesmen. Many Chinese companies wan o come o heUnied Saes, direcly inves in his counry, and creae jobs here. Ta is exacly whaour economy needs, paricularly in secors such as renewable energy generaion hagenerally do no pose naional securiy concerns and will require large amouns o invesmen capial o develop. Te problem is, however, ha we do no have a goodpolicy ramework in place o encourage hese invesmens.In Presiden Obamas rs erm, he Whie House signaled general suppor or increas-ing Chinese direc invesmen. During Vice Presiden Joe Biden’s Augus 2011 Chinarip, or example, he vice presiden saed:
 President Obama and I, we welcome, encourage and see nothing but positive benets owing fom direct investment in the United States fom Chinese businesses andChinese entities. It means jobs. It means American jobs.
5
 
3Center or American Progress | Increasing Opportunities or Chinese Direct Investment in U.S. Clean Energy
From he perspecive o mos poenial Chinese invesors, however, hose general sae-mens o welcome are no enough o make he U.S. marke look like a good be. Teseinvesors need o be able o predic how he U.S. governmen will respond o paricularoreign-invesed business models—and ha requires acual policies. Te only policies we have a presen are he naional securiy review policies o he Commitee on ForeignInvesmen in he Unied Saes, which are designed o block oreign direc inves-mens ha could pose naional securiy concerns. Naional securiy proecions are verimporan, bu we should pair hose proecions wih addiional policies designed oencourage oreign invesmen in he secors where securiy is no an issue. In his era o economic diculy, we should no le hose opporuniies go by he wayside.Tis issue brie will ouline he opporuniies and curren problems in atracingChinese direc invesmen and oer policy recommendaions or how he Unied Saescan make he mos o Chinese capial and knowledge in he clean energy secor.
Why encouraging inward Chinese direct investment in clean energymakes sense for the United States
Presiden Obama’s adminisraion made grea srides in his rs erm oward building asusainable U.S. clean energy economy ha will provide jobs or middle-class Americansand reduce our naion’s dependence on oreign oil and ossil uels.
6
Bu more work isneeded. Moving oward a clean energy economy in he Unied Saes will require morehan $1 rillion o invesmen in he elecriciy grid, new uels, mass ransi, power gen-eraion, and manuacuring.
7
An invesmen o his size will require he Unied Saes omobilize every possible source o capial, including oreign direc invesmen. While he Unied Saes has a sizeable invesmen need, Chinese invesors are eager ornew opporuniies in oreign markes—and he U.S. marke in paricular. Teir goals areno always perecly aligned wih ours, nor do U.S. marke opporuniies always per-ecly mee heir needs. Ta said, however, here are imes when Chinese direc inves-men in he U.S. clean energy economy would be muually benecial.Chinese enerprises would like o inves in he Unied Saes or many reasons, including:Some poenial invesors are seeking inrasrucure invesmens wih sable reurns.Ohers are seeking access o innovaive echnology and processes or high-yield oppor-uniies in manuacuring.Direcly invesing in he Unied Saes can give Chinese enerprises a local presenceand a closer relaionship wih U.S. consumers—wo criical prerequisies or buildingand promoing Chinese name-brand goods and services.

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