Abstract

"State industrial policies, Clean Energy Industry and Critical Minerals: the Case of China"

Debamanyu Das, University of Massachusetts, Amherst (debamanyudas@umass.edu)

During the 1980s China anticipated shortages in the supply of energy raw materials needed to meet the needs of its growing population. China also strove to develop its automobile industry, in response to the overarching presence of Japan, the U.S. and Germany. Now, four decades later, China controls the vast majority of critical mineral supply chains required for clean energy products such as electric vehicles. How did China transform its challenges into opportunities to develop the clean energy industry and dominate critical mineral supply chains?

Using China’s historical state records dating back to the 1980s, I study the complex relationship between the state, and the private sector and the importance of industrial policies. I find that the Chinese state played the role of an entrepreneur: it redirected its resources to clean energy technologies, promoted innovations, harnessed the technological advances, helped business corporations to expand manufacturing of clean energy products and commercialized them. I use a novel dataset of mining related acquisition deals to study various tactics used by Chinese corporations to capture the mineral supply chains. These include offering premium bids, and directly purchasing majority stakes of foreign corporations. While many of these tactics of Chinese corporations appear to be market-driven, the state played a key role in supporting them. It eased foreign investment guidelines, provided grants, encouraged joint ventures and technology transfer, and used loan forgiveness as policy tools in the Belt and Road Initiative (BRI) countries to secure more energy raw materials. I argue that in China, corporations have acted not just by profit motives but have followed state designated goals to indirectly benefit from state support. The joint operation of state-owned enterprises, private corporations and the state has resulted in China to be the leader of the critical mineral and clean energy industry.