Washington may be cordially welcoming Chinese President Hu Jintao to town this week, but it does so against a backdrop of American anxiety about China's rise that has rarely been so intense. In addition to long-running fears about U.S. debt holdings and currency controls, American pundits and policymakers now fret about China's educational prowess, military technology, and geopolitical ambitions.
Among the newest worries is the fear that China is poised to beat the United States in what many have claimed is the premier technological competition of the early 21st century: the race to develop and manufacture the clean energy technologies that will power the post-fossil-fuel world. "I am more convinced than ever that when historians look back at the end of the first decade of the 21st century, they will say that the most important thing to happen was not the Great Recession, but China's Green Leap Forward," New York Times columnist Tom Friedman wrote last week. Energy Secretary Steven Chu recently devoted an entire speech, complete with frightening PowerPoint slides, to the Chinese juggernaut, declaring China's rapid clean energy advances a "Sputnik moment" and calling on the United States to respond.
These warnings are grossly overblown. China is not crushing the United States in a clean energy race. And this myth isn't merely wrong -- it is also dangerous. Unwarranted fears of a clean energy competition threaten to spur a protectionist wave in the United States while squelching cooperation between the two countries -- all of which will make it much tougher to develop the robust clean energy economy that the world needs.
The numbers, it's true, look scary. According to Bloomberg New Energy Finance, China led the world in clean energy investment last year at $51.1 billion, up 30 percent from 2009. The United States runs a trade deficit in clean energy products with China that, according to the AFL-CIO, cost U.S. workers 8,000 jobs in 2010. A team of Harvard University researchers reported in November that the Chinese government spent $11.8 billion on energy technology research, development, and demonstration (RD&D) in 2008, while the United States spent barely a third as much.
These figures, however, are misleading. Yes, China spent more money buying wind turbines and solar panels than any other country last year. But consumption does not necessarily translate into technological leadership -- if it did, the United States would have little to worry about in most product categories. Massive deployment of clean energy will give the Chinese government leverage with foreign firms (because Beijing will be able to demand concessions in exchange for market access) and provide opportunities for incremental innovation. But the cutting edge is, in most cases, far away: The Chinese innovation system still has enormous difficulty moving ideas from the laboratory to commercial application.
The AFL-CIO employment analysis, for its part, is extraordinarily narrow. Many clean energy products manufactured in China incorporate sophisticated materials and components made in the United States, which means that U.S. manufacturers can often benefit from their Chinese counterparts' gains. The Harvard report, while more careful, also paints only a partial picture. Much U.S. RD&D happens in the private sector, which means it doesn't register in the researchers' government-to-government comparison. The Chinese economy, by contrast, is dominated by government and state-owned enterprises; as a result, a much larger fraction of its spending shows up in the analysis. No one has good numbers that describe the full picture, but it's certainly too early to conclude that the United States is far behind.
But don't broader trends reinforce the doom-and-gloom message? According to Chu's speech, China has jumped from 15th to fifth in global patent rankings and from 14th to second in published research articles, while passing the United States as the leading source of global high-tech exports. But none of these statistics tells the full story.
As my colleague Adam Segal argues in his fascinating new book Advantage, Chinese patent numbers are inflated by perverse incentives: Universities and enterprises encourage people to file for patents even when they have little or no real intellectual property to protect. He also points out that Chinese scientific journals are rife with plagiarism and fraud. That's not unrelated to the impressive publication counts: When institutional pressures reward publication at all costs, the result is both high quantity and low quality.