NCPA - National Center for Policy Analysis

China Spends More, but Doesn't Get Results

February 22, 2011

Does China's government-funded push into so-called green energy constitute a "Sputnik moment" for the United States?  That's the term President Obama used in a December 6 speech in Winston-Salem, N.C.  There are two main problems with President Obama's comparison of Sputnik to our contemporary energy competition with China:  It completely misunderstands the Chinese energy industry, and it completely misunderstands the American energy industry, say Nicolas Loris, a research associate, and Derek Scissors, a research fellow, at the Heritage Foundation.

  • Over the past decade, the United States has increased its energy efficiency by about 2.5 percent annually.
  • Despite a far greater scope for improvement -- and despite a great deal of government spending -- China raised its efficiency by only 1.7 percent annually.
  • China is praised for its green-energy investments, but in 2009 and through the first quarter of 2010 its coal production grew faster than overall electricity production.
  • Through 2020, China is projected to account for half of global greenhouse gas emissions.

So it is true that China is spending money on energy hand over fist.  But China has little to show for it.  Massive regulatory intervention and tens of billions of dollars in annual spending on green energy have produced results that are drastically inferior to those of the United States -- both economically and environmentally -- and have left China falling farther behind rather than marching ahead, contrary to the popular myth, say Loris and Scissors.

Source: Nicolas Loris and Derek Scissors, "China's 'Sputnik Moment'," Heritage Foundation, January 21, 2011.

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