Clean-energy FDI has local flavor

Chinese direct investment in the US clean-energy sector is greatly influenced by local policies, according to a policy expert.

Melanie Hart, director for China policy at the Center for American Progress, spoke at a forum on cleaner and greener Chinese direct investment in the US energy sector on Thursday at the Wilson Center in Washington.

Hart recently published a new report that looked at more than 60 major projects and found that clean-energy investments follow state policies to a great extent.

For example, California, with many policies encouraging clean energy, is a top destination across multiple renewable-energy sectors.

New Jersey has the most solar investments. Texas is leading the nation with more than 17,000 jobs in the wind sector.

Chinese foreign direct investment in the United States accelerated only a few years ago, but Chinese companies are now building a variety of solar and wind farms, electric-vehicle manufacturing plants and other greenfield energy projects across America.

Many US clean-energy investments in the past have been deterred by the long payoff periods associated with new technology, Hart said. However, "China has focused on clean energy from the top down much more strongly and earlier than the US has, so a lot of Chinese investors saw clean-energy investments as a great strategic opportunity.

"Some states recognize they are punching below their weight," Hart said, which she found out during interviews for the report. But that may be because the states lack sufficient networks, as they also have found that areas with strong networking programs see a cluster in clean-energy FDI from China.

"This is a local government story," Hart said. "It's not the case that the Department of Energy is going out picking a Chinese investor and pushing these forward.

"It's the case that a mayor is going to China, in some cases five to 10 times, to court Chinese investors to bring in money and jobs for their city," she said.

"I think we all agree that Chinese direct investment is generally a positive thing," said Damien Ma, a fellow at the Paulson Institute and former lead China analyst at Eurasia Group. "Given all the other nasty things that (have) been happening in the bilateral relationship, this can serve as a 'new anchor' in our relationship."

"They (Chinese FDI) are creating value and creating assets and hiring workers," Hart said. "They're creating companies that wouldn't exist without them. And that's the easiest-to-understand picture of how these investments can be a win."

Liu Jingyang in Washington contributed to this story.