Washington needs to be bold when it comes to clean
By Clyde Prestowitz
I was recently reminded of a conversation I participated in that took
place in vice- president Joe Biden's office in the early days of the
first Obama Administration, about how to put together the President's
upcoming stimulus proposal. Part of the overall discussion dealt with
the role of clean technologies and the possibility of using green jobs
as one of the linchpins of the program.
The room split into two camps. On one side, you had environmental
activists who argued for a strong government role in helping these
relatively nascent industries grow and flourish. On the other side, you
had conventional economists making the opposite point that we should
allow the markets to determine which industries would succeed. These
economists pulled out the old line about the government not picking
winners and losers.
I felt a sense of déjà vu. I remembered having this exact
same conversation more than 25 years ago when I worked in the Reagan
After all, we have faced this question before in other industries,
especially in the semiconductor industry in the 1980s with regard to
Japan. In those days, Japan targeted key industries for development as
part of its industrial policy. It protected them at home, provided
special investment incentives and preferred financing, and promoted
their exports, also with special tax incentives and by maintaining an
It is important that we remember the lessons learned from our issues
with Japan in the 1980s when dealing with China.
In my opinion, this debate shows a continued fundamental
misunderstanding of the way the world works. Rather than rehashing the
same old debate for the ten thousandth time, we need to realize that
many of our trading partners are already intervening in the market.
Whether it is China, Japan, Korea, or Germany, all of these countries
have long ago put in place policies—dare I say industrial
policies—to promote these industries. They see clean tech
industries—solar, wind, batteries, and others—as the
industries of the future and have put policies in place to support
Although China is not the only country that put policies in place to
support their clean tech industries, it is one of the most aggressive.
One powerful element of China's industrial policy strategy is the 863
Program, a project launched in March 1986 (863 is the year and date of
the project's birth) by China's then paramount leader Deng Xiaoping to
drive its technological catch-up effort.
In 2001 this program began to focus intensely on energy, especially new
or green energy, setting targets for installing wind turbines, solar
panels, hydroelectric dams, and other renewable resources. In 2006 the
863 Program drove China to double its wind power capacity, and then it
doubled again the following year and again the year after that. In 2003
China had virtually no solar power industry. By 2008, it was making
more solar cells than any other country and taking customers away from
American and other foreign companies that had originally invented the
So, what do we need to do in the U.S.?
I believe that we need our own program to support industries we deem
important— and I believe clean tech is important. This is not, as
the conventional economists claim, picking winners and losers. We are
already doing that—we just don't want to say we do it using those
loaded terms. Indeed, we should not worry about these criticisms. We
need to accept them, move on, and enact policies that will help
American manufacturers and promote global innovation.
I would argue that for the government to stand to the side and do
nothing is a de facto industrial policy of the worst kind. We are in
effect saying we don't care where the next generation of clean
technologies are designed and built. We are willing to step aside and
let another country dominate a sector. We are also saying we are
sticking with the status quo and continuing our reliance on imported
oil and dirty coal.
The challenge we face is that if we want the United States to remain
competitive globally in clean tech-nologies, we need to do something
that is rare in Washington these days. We need to be bold.
There are opportunities to work with China, and the United States
government should explore them, just as we would with any other
country. But we should remember that the Chinese government has a
policy to not just be a leader in a number of technologies, but the
leader. The United States must determine how we are going to respond
and decide how much we want to be a leader.
With strong action, we have the opportunity to develop a globally
competitive industry in a sector that has great promise both
economically and environmentally. Without it, we face a future where
the United States is sitting on the sidelines.
the Record is an excerpt of the presentation of Clyde Prestowiz,
President of the Economic Strategy Institute, before the U.S. Senate
Energy and Natural Resources Committee in June 2012.