Green to China – or green by China?

One of the standard responses to the trade deficit with China is to point to the opportunity to sell China green technology. The US, it is said, can export advanced technology to China to solve their environmental problems. While I have always thought that green technology is a good opportunity for US companies, I have been a little wary of the claim about solving our trade deficit that way. In part, there has been this nagging in the back of my mind that this assertion assumes the old paradigm of trade: advanced countries develop the technology at home and then export the second generation to the “developing” nations. This assumption is failing to meet the new reality test of the global technology development.
The latest on this comes from a story in today’s International Herald Tribune —
GM plans a research center in Shanghai for hybrid technology:

General Motors announced here Monday that it would build an advanced research center in Shanghai to develop hybrid technology and other designs, in the latest research investment in China by a foreign automaker despite chronic problems with purloined car designs.
. . .
Planned for weeks, the Monday announcement coincidentally came right after the Chinese government’s powerful National Development and Reform Commission disclosed Friday that it was drafting stringent local content rules for alternative fuel vehicles to qualify for likely government subsidies. The rules will require that key components be manufactured in China.
“They don’t want to give big incentives just for people to import stuff,” said Nick Reilly, a GM group vice president who runs the company’s Asia-Pacific operations.
The Chinese government’s move is aimed partly at Toyota, which assembles Prius gasoline-electric hybrid cars in China but ships the critical components in sealed boxes from factories in Japan.

Clearly, the Chinese want to go green by producing and developing the technology at home – rather than simply importing it from others. And apparently, Toyota and the Japanese are working on a strategy for making sure that they create home-country exports out of these sales abroad – beyond just the royalty stream. It is not clear the American’s have figured out how to do either of these — or if whether they should or not.

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