Forget cheap shoes.China is leaping up the technology ladder at a rate that has caught its competitors off guard,not least in renewable energy.
The pace of the country's progress was on full display last week at an energy conference in Melbourne.Or rather,it would have been if the organisers of the All-Energy exhibition had not capped the number of Chinese firms to about a fifth of the 274 booths to give other countries a look-in.
Even so,Chinese-made solar,wind and other renewable energy products dominated."Maybe 80 per cent,including those distributed by others,is from China,"said Julie Peng,a sales manager with Phono Solar,part of the state-owned Sinomach,one of the country's largest machinery makers.
The surge in China's output of solar photovoltaic(PV)panels has led to the introduction of anti-dumping tariffs by the US and the prospect of European action.
The price of PV panels has crashed worldwide as a consequence of the Chinese output.
"The price of PV modules has fallen by 75 per cent since 2008,and some 45 per cent in 2011,"said Kobad Bhavnagri,lead clean-energy analyst,Australia,for Bloomberg New Energy Finance.
"Every time global production of PV modules has doubled,the cost has fallen by 24 per cent."
China now produces about 60 per cent of all PV cells.Since 2009,global solar manufacturing capacity has more than tripled,but almost all of the growth has been in China,Mr Bhavnagri said.
Take a company like Zhongli Talesun.Founded in late 2010,the company will produce 2 gigawatts of PV capacity this year-the same amount as Australia's entire rooftop capacity,that was reached just this month,the Clean Energy Regulator's figures show.
Chinese exhibitors said the phasing-out of subsidised feed-in tariffs in Australia had dented local growth.They are betting that a drop in wholesale PV prices to as low as 70¢a watt will find a market in the 90 per cent of households that do not have solar power.
As the Climate Institute noted in its recent Carbon Markets and Climate Policy in China report,it is becoming harder to argue that the country is a laggard in its efforts to reduce its carbon emissions.
"In solar energy alone,China exports$35.8 billion worth of products per year,similar to the total value of shoes China exported($39 billion)in 2011,"the report says.
'Solar winter'
Growth in the PV market will not be easy,however.Last week,the US confirmed it was levying hefty tariffs on imported PV cells made by Chinese firms in China to protect the local industry from a flood of allegedly subsidised production.
The European Commission last month launched its own anti-dumping investigation.The European Union reportedly took about 60 per cent of China's exports of solar panels and components last year,battering one of its most-promising generators of jobs and growth.
"We have until about June to increase exports"to Europe,a sales representative for one Chinese exporter said,"then we'll have to focus more on the Chinese market."
The trouble with that plan is that Chinese provinces tend to favour local companies over outsiders-not least when they are baling them out with state funds.
For example,Wuxi city in eastern China recently granted 200 million yuan($31 million)in emergency funds to bolster the ailing solar company Suntech Power.
Suntech's founder,the Australian-and possibly now former-billionaire Shi Zhengrong,stepped down as chairman after the New York-listed company revealed it had been stung by a massive fraud.
"We call this the'solar winter',''said Zeng Chunming,the vice-sales manager of Eifesun,a maker of solar power inverters,from Wenzhou,China's shoe capital,and a city famous for its freewheeling entrepreneurism."Hopefully,it will soon be'solar spring'."
PhonoSolar's Ms Peng said her company relies on exports for 80 per cent of its sales but that ratio will drop this year.Apart from the US and European troubles,Chinese suppliers will also find sales to Japan and Southeast Asia harder because of the current island disputes,so her company is targeting India,South Africa and Australia.
BNEF's Mr Bhavnagri likens the coming industry shake-up to the US car industry where some 500 suppliers in the early 1900s shrank to just three.
Supply of solar PV will exceed demand for years to come,he predicts.Excessive investment is one cause,but innovation is another.Wind turbine costs,for instance,typically drop 14 per cent for each doubling in output.
"We've seen a wonderful trend of technology costs coming down,and they will keep on coming down,"he said.
