Patrick Chovanec, a professor at Tsinghua University’s School of Economics and Management in Beijing, has an excellent roundup of the boondoggles besetting China—the kinds of boondoggles only top-down misinvestment can create (h/t Tyler Cowen). We’ve previously noted the problems with China’s solar energy sector, but we haven’t written much about their troubles with wind. Some of the statistics are jaw-droppers:
China’s top wind turbine manufacturers, Goldwind and Sinovel, saw their earnings plummet by 83% and 96% respectively in the first half of 2012, year-on-year. Domestic wind farm operators Huaneng and Datang saw profits plunge 63% and 76%, respectively, due to low capacity utilization. China’s national electricity regulator, SERC, reported that 53% of the wind power generated in Inner Mongolia province in the first half of this year was wasted. One analyst told China Securities Journal that “40-50% of wind power projects are left idle,” with many not even connected to the grid.
There’s lots more where that came from. Read the whole thing. Mr. Chovanec’s takeaway?
Many in Washington have developed a serious case of China-envy, seeing it as an exemplar of how to run an economy. In fact, Beijing’s mandarins are no better at picking winners, and just as prone to blow money on boondoggles, as their Beltway counterparts.
In his State of the Union address earlier this year, President Obama declared, “I will not cede the wind or solar or battery industry to China . . . because we refuse to make the same commitment here.” Given what’s really happening in China, he may want to think again.