Environmental and Resource Economics

, Volume 60, Issue 2, pp 243–283 | Cite as

Chinese Renewable Energy Technology Exports: The Role of Policy, Innovation and Markets

  • Felix Groba
  • Jing Cao


Chinese companies have become major technology producers, with the largest shares of their output exported. This paper examines the development of solar PV and wind energy technology component (WETC) exports from China and the competitive position of the country‘s renewable energy industry. We also describe the government’s renewable energy policy and its success in renewable electricity generation as well as increasing renewable energy innovation and foreign knowledge accumulation, which may drive export performance. We aim at empirically identifying determinants of Chinese solar PV and WETC exports. We estimate a gravity trade model using maximum likelihood estimation. Besides controlling for standard variables, we consider additional explanatory factors by accounting for market, policy and innovation effects steaming from both importing countries and China. We use a panel dataset representing bilateral trade flows of 43 developed and developing countries that imported solar PV and WETCs from China between 1996 and 2008. Empirical results indicate that high income countries, with large renewable energy markets and demand side policy support schemes, in terms of incentive tariffs, are increasingly importing Chinese solar PV components. We show that trade costs have a negative impact on exports of solar PV components but not WETC. Additionally, we find a positive impact of research and development appropriation growth, especially from provincial governments in China, but no evidence that bilateral knowledge transfer and indigenous innovation affect exports.


China Gravity model Trade Innovation Policy Renewable energy technologies 

JEL Classification

C32 F14 O30 Q42 Q48 Q56 


  1. Alavi R (2007) An overview of key markets, Tariff s and Non-tariff measures on asian exports of select environmental goods. ICTSD trade and environment series issue paper no. 4. International Centre for Trade and Sustainable Development (ICTSD) Programme on Trade and Environment, GenevaGoogle Scholar
  2. Algieri B, Aquino A, Succurro M (2011) Going green: trade specialisation dynamics in the solar photovoltaic sector. Energy Policy 39(11):7275–7283. doi: 10.1016/j.enpol.2011.08.049 CrossRefGoogle Scholar
  3. Amiti M, Freund C (2010) The anatomy of China’s export growth. In: Feenstra RC, Wei S-J (eds) China’s growing role in world trade. University of Chicago Press, Chicago, pp 35–56Google Scholar
  4. Anderson JE (1979) A theoretical foundation for the gravity equation. Am Econ Rev 69(1):106–116Google Scholar
  5. Anderson JE, van Wincoop E (2003) Gravity with gravitas: a solution to the border puzzle. Am Econ Rev 93(1):170–192CrossRefGoogle Scholar
  6. Awokuse TO, Yin H (2010) Does stronger intellectual property rights protection induce more bilateral trade? Evidence from China’s imports. World Dev 38(8):1094–1104. doi: 10.1016/j.worlddev.2009.12.016 CrossRefGoogle Scholar
  7. Balassa B (1969) Country size and trade patterns: comment. Am Econ Rev 59(1):201–204Google Scholar
  8. Baldwin RE, Taglioni D (2006) Gravity for dummies and dummies for gravity equations. CER discussion paper no. 5850Google Scholar
  9. Bell M, Pavitt K (1993) Technological accumulation and industrial growth: contrasts between developed and developing countries. Ind Corp Change 2(2):157–209CrossRefGoogle Scholar
  10. Bergstrand JH (1985) The gravity equation in international trade: some microeconomic foundations and empirical evidence. Rev Econ Stat 67(3):474–481CrossRefGoogle Scholar
  11. Bergstrand JH (1989) The generalized gravity equation, monopolistic competition, and the factor-proportions theory in international trade. Rev Econ Stat 71(1):143–153CrossRefGoogle Scholar
  12. Bergstrand JH, Egger P, Larch M (2011) Economic determinants of the timing of preferential trade agreement formations and enlargements, University of Notre Dame Working PapersGoogle Scholar
  13. Bosetti V, Carraro C, Massetti E, Tavoni M (2008) International energy R&D spillovers and the economics of greenhouse gas atmospheric stabilization. Energy Econ 30(6):2912–2929CrossRefGoogle Scholar
  14. Branstetter L, Fisman R, Foley CF (2005) Do stronger intellectual property rights increase technology transfer? Empirical evidence from US firmlevel panel data. Q J Econ 121(1):321–349CrossRefGoogle Scholar
  15. BTMConsult (2011) International wind energy development—supply change assessment 2012. In: Navigant (Ed). KopenhagenGoogle Scholar
  16. Buxton T, Mayes D, Murfin A (1991) UK trade performance and R&D. Econ Innov New Technol 1(3):243–256CrossRefGoogle Scholar
  17. Cameron AC, Trivedi PK (2005) Microeconometrics: methods and applications. Cambridge University Press, New YorkCrossRefGoogle Scholar
  18. Caprotti F (2009) Chinas cleantech landsscape: the renewable energy technology paradox. Sustainable development. Law Policy IX(3):6–10Google Scholar
  19. CEPII (2012) Gravity data Set. Centre d’Etudes Prospectives et d’Informations internationales, ParisGoogle Scholar
  20. Chamberlain GA (1980) Analysis of covariance with qualitative data. Rev Econ Stud 47(1):225–238CrossRefGoogle Scholar
  21. Cherni JA, Kentish J (2007) Renewable energy policy and electricity market reforms in China. Energy Policy 35(7):3616–3629. doi: 10.1016/j.enpol.2006.12.024 CrossRefGoogle Scholar
  22. Costantini V, Crespi F (2008) Environmental regulation and the export dynamics of energy technologies. Ecol Econ 66(2008):447–460CrossRefGoogle Scholar
  23. Constantini V, Mazzanti M (2012) On the green and innovative side of trade competetivness? The impact of environmental policies and innovation on EU exports. Res Policy 41:132–153CrossRefGoogle Scholar
  24. Davidson R, Mackinnon JG (1993) Estimation and inference in econometrics. Oxford University Press, New YorkGoogle Scholar
  25. Dechezleprêtre A, Glachant M (2012) Does foreign regulation influence domestic investors? The case of renewable energy innovation. Centre for Climate Change Economics and Policy and Grantham Research Institute on Climate Change and the Environment, London, UKGoogle Scholar
  26. de la Tour A, Glachant M, Ménière Y (2011) Innovation and international technology transfer: the case of the Chinese photovoltaic industry. Energy Policy 39(2):761–770. doi: 10.1016/j.enpol.2010.10.050 CrossRefGoogle Scholar
  27. Dechezleprêtre A, Glachant M, Ménière Y (2010) What drives the international transfer of climate change mitigation technologies? Empirical evidence from patent data. Fondazione Eni Enrico Mattei working papers no. 2010–2012Google Scholar
  28. Dechezleprêtre A, Glachant M, Hascic I, Johnstone N, Meniere Y (2011) Invention and transfer of climate change-mitigation technologies: a global analysis. Rev Environ Econ Policy 5(1):109–130CrossRefGoogle Scholar
  29. Dinda S (2004) Environmental Kuznets curve hypothesis: a survey. Ecol Econ 49(4):431–455CrossRefGoogle Scholar
  30. Eaton J, Kortum S (2002) Technology, geography, and trade. Econometrica 70(5):1741–1779CrossRefGoogle Scholar
  31. Edmonds C, La Croix S, Li Y (2008) China trade: busting gravity’s bounds. J Asian Econ 19(5–6):455–466CrossRefGoogle Scholar
  32. EIA (2012) International energy statistics. Energy Information Administration (EIA), US Department of Energy, WashingtonGoogle Scholar
  33. EPI (2011) Annual solar photovoltaics production by country, 1995–2010. Earth Policy Institute, WashingtonGoogle Scholar
  34. EPO (2010) World patent statistical database (PATSTAT). European Patent Office, MunichGoogle Scholar
  35. Feenstra RC, Markusen JR, Rose AK (2001) Using the gravity equation to differentiate among alternative theories of trade. Canad J Econ 34(2):430–447CrossRefGoogle Scholar
  36. Fliess B, Kim JA (2008) Non-tariff barriers faceing trade in selected environmental goods and associated services. J World Trade 42(3):535–562Google Scholar
  37. Frankel JA (1997) Regional trading blocs in the world economic system. Institute for International Economics, WashingtonCrossRefGoogle Scholar
  38. Fu X, Gong Y (2011) Indigenous and foreign innovation efforts and drivers of technological upgrading: evidence from China. World Dev 39(7):1213–1225CrossRefGoogle Scholar
  39. Grau T, Huo M, Neuhoff K (2012) Survey of photovoltaik industry and policy in Germany and China. Energy Policy 51(C):20–37CrossRefGoogle Scholar
  40. Green WH (2002) Econometric analysis, 5th edn. Prentice Hall, New JerseyGoogle Scholar
  41. Greenhalgh C (1990) Innovaton and trade performance in the UK. Econ J 100(400):105–118CrossRefGoogle Scholar
  42. Griliches Z (1990) Patents as economic indicators: a survey. J Econ Lit 28(4):1661–1707Google Scholar
  43. Groba F (2011) Determinants of trade with solar energy technology components: evidence on the porter hypothesis? DIW Berlin discussion paper no. 1163Google Scholar
  44. Grossman GM, Helpman E (1991) Trade, knowledge spillovers, and growth. Eur Econ Rev 35(2–3):517–526CrossRefGoogle Scholar
  45. Guan J, Ma N (2003) Innovative capability and export performance of Chinese firms. Technovation 23(9):737–747CrossRefGoogle Scholar
  46. Guan JC, Yam RCM, Tang EPY, Lau AKW (2009) Innovation strategy and performance during economic transition. Res Policy 38(5):802–812CrossRefGoogle Scholar
  47. Guellec D, van Pottelsberghe de la Potterie B (2004) From R&D to productivity growth: do the institutional settings and the source of funds of R&D matter? Oxf Bull Econ Stat 66(3):353–378CrossRefGoogle Scholar
  48. Guimaraes P (2008) The fixed effects negative binominal model revisited. Econ Lett 99(1):63–66CrossRefGoogle Scholar
  49. Hamwey RM (2005) Environmental goods: where do the dynamic trade opportunities for developing countries lie? In: Hong Kong trade and development symposium at the sixth WTO ministerial conference, 2005. Center for Economic and Ecological StudiesGoogle Scholar
  50. Hasan R, Raturi M (2001) Does investing in technology affect exports? Evidence from indian firms. East–West center working paper no. 21Google Scholar
  51. Hirsch S, Bijaoui I (1985) R&D intensity and export performance: a micro view. Weltwirtschaftliches Archiv 121(2):238–251CrossRefGoogle Scholar
  52. Hsiao C (2003) Analysis of panel data (second). Cambridge University Press, CambridgeCrossRefGoogle Scholar
  53. Hu M-C, Mathews JA (2008) China’s national innovative capacity. Res Policy 37(9):1465–1479CrossRefGoogle Scholar
  54. Hu AG, Jefferson GH (2009) A great wall of patents: what is behind China’s recent patent explosion? J Dev Econ 90(1):57–68CrossRefGoogle Scholar
  55. Hu AG (2010) Propensity to pantent, competition and Chinas foreign patenting surge. Res Policy 39(7): 985–993Google Scholar
  56. Hu JH, Tsen KH, Hui SS (2010) China rationalizes its renewable energy policy. Electr J 23(3):26–34CrossRefGoogle Scholar
  57. IEA (2004) Renewable energy. Market and policy trends in IEA Countries. International Energy Agency (IEA), ParisGoogle Scholar
  58. IEA (2010) World energy outlook 2010. International Energy Agency (IEA), ParisGoogle Scholar
  59. (2012) Global renewable energy policies and measures database. International Energy Agency (IEA) and International Renewable Energy Agency (IRENA), ParisGoogle Scholar
  60. Jaffe AB (1986) Technological opportunity and spillovers of R&D: evidence from firms patents, profits, and market value. Am Econ Rev 76(5):984–1001Google Scholar
  61. Johnstone N, Hascic I, Popp D (2010) Renewable energy policies and technological innovation: evidence based on patent counts. Environ Resour Econ 45(1):133–155CrossRefGoogle Scholar
  62. Jug J, Mirza D (2005) Environmental regulation in gravity equations: evidence from Europe. World Econ 28(11):1591–1615CrossRefGoogle Scholar
  63. Keesing DB (1967) The impact of research and development on United States trade. J Polit Econ 75(1):38–48CrossRefGoogle Scholar
  64. Krugman PR (1979) Increasing returns, monopolistic competition, and international trade. J Int Econ 9(4): 469–479Google Scholar
  65. Levinson A (2009) Technology, international trade, and pollution from US manufacturing. Am Econ Rev 99(5):2177–2192CrossRefGoogle Scholar
  66. Lewis JI (2005) From technology transfer to local manufacturing: China‘s emergence in the global wind power industry. Doctoral Dissertation of UC Berkeley, Berkeley, CAGoogle Scholar
  67. Lewis JI (2011) Building a national wind turbine industry: experiences from China, India and South Korea. Int J Technol Glob 5(3–4):281–305CrossRefGoogle Scholar
  68. Ma H, Oxley L, Gibson J, Li W (2010) A survey of China’s renewable energy economy. Renew Sustain Energy Rev 14(1):438–445CrossRefGoogle Scholar
  69. Madden GG, Savage SJ, Thong SY (1999) Technology, investment and trade: empirical evidence for five Asia–Pacific countries. Appl Econ Lett 6(6):361–363CrossRefGoogle Scholar
  70. Magnier A, Toujas-Bernate J (1994) Technology and trade: empirical evidence for major five industrialised countries. Weltwirtschaftliches Archiv 130(3):494–520CrossRefGoogle Scholar
  71. Maskus KE, Penubarti M (1995) How trade-related are intellectual property rights? J Int Econ 39(3–4):227–248CrossRefGoogle Scholar
  72. MOST (2011) China science and technology statistics data book. Ministry of Science and Technology of the People’s Republic of China (MOST), BeijingGoogle Scholar
  73. Motohashi K, Yuan Y (2010) Productivity impact of technology spillovers from multinationals to local firms: comparing China’s automobiles and electronics industries. Res Policy 39(6):790–798CrossRefGoogle Scholar
  74. Mundlak Y (1978) On the pooling of time series and cross section data. Econometrica 46(1):69–85CrossRefGoogle Scholar
  75. OECD and Eurostat (1999) The environmental goods and service industry—manual for data collection and analysis. OECD Publication Service, ParisGoogle Scholar
  76. Pamukcu T (2003) Trade liberalization and innovation decisions of firms: lessons from post-1980 Turkey. World Dev 31(8):1443–1458CrossRefGoogle Scholar
  77. Papaconstantinou G (1997) Technology and industrial performance. OECD Obs 204:6–10Google Scholar
  78. Park WG, Lippoldt DC (2005) International licensing and the strenghtening of intellectual property rights in developing countries during the 1990s. OECD economic studies no. 40Google Scholar
  79. Park WG, Lippoldt DC (2008) Technology transfer and the economic implications of the strengthening of intellectural property rights in developing countries. OECD trade policy working papers no. 62Google Scholar
  80. Peidong Z, Yanli Y, jin S, Yonghong Z, Lisheng W, Xinrong L (2009) Opportunities and challenges for renewable energy policy in China. Renew Sustain Energy Rev 13(2):439–449CrossRefGoogle Scholar
  81. Popp D, Hascic I, Medhi N (2011) Technology and the diffusion of renewable energy. Energy Econ 33(4):648–662CrossRefGoogle Scholar
  82. Porter ME, Stern S (2000) Measuring the ”ideas” production function: evidence from international patent output. NBER working paper no 7891Google Scholar
  83. Posner M (1961) International trade and technical change. Oxf Econ Papers 13(3):323–341Google Scholar
  84. Rafiquzzaman M (2002) The impact of patent rights on international trade: evidence from Canada. Canad J Econ 35(2):307–330CrossRefGoogle Scholar
  85. REN21 (2009) Background paper: chinese renewable status report. Secretariat Renewable Energy Policy Network for the 21st Century (REN21), ParisGoogle Scholar
  86. REN21 (2011) Renewables 2011: global status report. Secretariat Renewable Energy Policy Network for the 21st Century (REN21), ParisGoogle Scholar
  87. Rodrik D (2006) What’s so special about China’s exports. NBER working papers, no 11947Google Scholar
  88. Roper S, Love JH (2002) Innovation and export performance: evidence from the UK and German manufacturing plants. Res Policy 31(7):1087–1102CrossRefGoogle Scholar
  89. Ru P, Zhi Qiang, Zhang Fang, Zhong Xiaotian, Li Jianqiang (2012) Behind the development of technology: the transition of innovation modes in China’s wind turbine manufacturing industry. Energy Policy 43(2012):58–69CrossRefGoogle Scholar
  90. Santos Silva JMC, Tenreyo S (2006) The log of gravity. Rev Econ Stat 88:641–658CrossRefGoogle Scholar
  91. Sawhney A, Kahn MH (2012) Understanding cross-national trends in high-tech renewable power equipment exports to the United States. Energy Policy 46(2012):308–318CrossRefGoogle Scholar
  92. Schott PK (2008) The relative sophistication of Chinese exports. Econ Policy 53(1):5–49Google Scholar
  93. Smith PJ (1999) Are weak patent rights a barrier to US exports? J Int Econ 48(1):151–177CrossRefGoogle Scholar
  94. Smith PJ (2001) How do foreign patent rights affect US exports, affiliate sales and licences. J Int Econ 55(2):411–439CrossRefGoogle Scholar
  95. Soete L (1987) The impact of technological innovation on international trade patterns: the evidence reconsidered. Res Policy 16(2–4):101–130CrossRefGoogle Scholar
  96. Steenblik R (2005) Liberalisation of trade in renewable-energy products and and associated technologies: charcoal, photovoltaic systems, and wind pumps and turbines. OECD trade and environment working paper no 2005–2007Google Scholar
  97. Steenblik R (2006) Liberalisation of trade in renewable energy and associated technologies: biodiesel, solar thermal and geothermal energy. OECD trade and environment working papers no 2006–01Google Scholar
  98. Sun Y (2003) Deteminants in foreign patents in China. World Pat Inf 25(1):27–37CrossRefGoogle Scholar
  99. Tan X (2010) Clean technology R&D and innovation in emerging countries–experience from China. Energy Policy 38(6):2916–2926CrossRefGoogle Scholar
  100. Tinbergen J (1962) Shaping the world economy: suggestions for an international economic policy. The Twentieth Century Fund, New YorkGoogle Scholar
  101. UNCTAD (2012) Comtrade - Commodity Trade Database, United Nations Statistics Division New YorkGoogle Scholar
  102. Vernon V (1966) International investment and international trade in the product cycle. Q J Econ 80(2):190–207CrossRefGoogle Scholar
  103. Verspagen B, Wakelin K (1997) Trade and technology from a Schumpeterian perspective. Int Rev Appl Econ 11(1997):181–194CrossRefGoogle Scholar
  104. Wakelin K (1998a) Innovation and export behavior at the firm level. Res Policy 26(7–8):829–841CrossRefGoogle Scholar
  105. Wakelin K (1998b) The role of innovation in bilateral OECD trade performance. Appl Econ 30(10):1135–1346CrossRefGoogle Scholar
  106. Wang C, Wei Y, Liu X (2010) Determinants of bilateral trade flows in OECD countries: evidence from gravity panel data models. World Econ 33(7):894–915CrossRefGoogle Scholar
  107. Wang F, Yin H, Li S (2010) China’s renewable energy policy: commitments and challenges. Energy Policy 38(4):1872–1878CrossRefGoogle Scholar
  108. Westerlund J, Wilhelmsson F (2008) Estimating the gravity model without gravity using panel data. Appl Econ Taylor Francis J 43(6):641–649CrossRefGoogle Scholar
  109. Westphal LE (2002) Technology strategies for economic development. Econ Innov New Technol 11(1–2):275–320CrossRefGoogle Scholar
  110. Wignaraja G (2012) Innovation, learning, and exporting in China: does R&D or a technology index matter? J Asian Econ 23(3):224–233CrossRefGoogle Scholar
  111. Wind I (2008) HS codes and the renewable energy sector (vol ICTSD programme on trade and environment. International Centre for Trade and Sustainable Development, GenevaGoogle Scholar
  112. Winkelmann R (2008) Econometric analysis of count data. Springer, BerlinGoogle Scholar
  113. WIPO (2012) International patent classification (IPC) green inventory. World Intellectual Property Organization, GenevaGoogle Scholar
  114. Wooldridge J (2010) Econometric analysis of cross section and panel data, 2nd edn. MIT Press, CambridgeGoogle Scholar
  115. World Bank (2012) World development indicators 2012. World Bank, WashingtonGoogle Scholar
  116. Wu C-Y, Mathews JA (2012) Knowledge flows in the solar photovoltaik industry: insights from patenting y Taiwan, Korea, and China. Res Policy 41(3):524–540CrossRefGoogle Scholar
  117. Xinyu G, Bo J, Bin L, Kai Y, Hongguang Z, Boyuan F (2011) Study on renewable energy development and policy in China. Energy Procedia 5(2011):1284–1290CrossRefGoogle Scholar
  118. Yang L, Maskus KE (2009) Intellectual property rights, technology transfer and exports in developing countries. J Dev Econ 90(2):231–236CrossRefGoogle Scholar
  119. Yue C, Hua P (2002) Does comparative advantage explains export pattern in China. China Econ Rev 13(2–3):276–296Google Scholar
  120. Zeng Z (2009) The comparison of innovation activities and international trade effect in China and Japan in the era of knowledge economy: Empirical research on patents as an example. J Chin Econ Foreign Trade Stud 2(3):211–228CrossRefGoogle Scholar
  121. Zhang KH, Song S (2000) Promoting exports—the role of inward FDI in China. China Econ Rev 11(4): 385–396Google Scholar
  122. Zhao H, Li H (1997) R&D and export: analysis of Chinese manufacturing firms. J High Technol Manag Res 8(1):89–105CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media Dordrecht 2014

Authors and Affiliations

  1. 1.German Institute of Economic Research (DIW Berlin)BerlinGermany
  2. 2.School of Economics and ManagementTsinghua University BeijingBeijingChina

Personalised recommendations