The Development of Green Industries in China and Its Implications for Developing Countries

Abstract: This thesis aims to investigate the different mechanisms that Chinese companies in green industries used to acquire technological capabilities and how they changed over time. The thesis also aims to examine how the geographical pattern in outbound Chinese greenfield foreign direct investment has changed over time. By examining the inbound and outbound greenfield foreign direct investment pattern in China and by performing case studies of several Chinese solar and wind power companies, several interesting conclusions were made. While the role of foreign direct investment as a mechanism to acquire capabilities remains inconclusive, the findings suggest that Chinese solar and wind companies used a dual focus of acquiring capabilities through both internal and external sources of knowledge and technology. Furthermore, as the companies became more technologically advanced, the mechanisms that were used to acquire capabilities from external sources evolved to require increasingly more effort and interaction with external actors. Moreover, the geographical pattern in outbound Chinese greenfield foreign direct investment in green industries shifted from flowing to high-income countries to middle-income countries, and particularly middle-income countries in Asia, around 2014. Based on the development in the solar and wind industries in China, several policies are suggested to the middle-income countries that received Chinese investment in solar and wind power.