Nurturing an Emerging Industry: State Husbandry, Midwifery, and the Development of China’s Photovoltaic Sector

Abstract

This paper explores the role played by the Chinese government in the development of the photovoltaic (PV) industry. As an emerging industry providing clean energy, its development and relatively high costs determine that it cannot be separated from the support of national industrial policies. Based on Evans’ theory on the roles of the state, this paper analyzes the government’s intervention behaviors primarily from the dimensions of the “husbandry” and “midwifery” roles. The research finds that when private actors meet difficulties in the market, the state plays a “husbandry” role by guiding state-owned enterprises (SOEs) to join the PV sector and M & A businesses, and by engaging in capital and technological cooperation with private companies. Meanwhile, the government plays a “midwifery” role by including PV development in national economic plans, providing financial subsidies, and establishing incentive policies such as feed-in tariffs to back up existing private actors and attract investors and consumers. As the market matures, the national policy orientation has gradually shifted from vigorous support to giving room for market coordination, aiming to facilitate the PV sector to grow independently and sustainably. Overall, the state’s active intervention has successfully boosted market confidence, decreased industrial costs, and raised production efficiency, exerting a remarkable effect on promoting China’s PV sector.