Technology Transfer in China: Case Studies, and International Implications

Aug 1, 2009 | RFF Staff

Technology Transfer to China

From the natural gas power plants that operate within its borders to the air conditioners and compact fluorescent light bulbs it ships around the globe, China’s manufacturing sector is an important component in the production and distribution of energy technology. And with its population of 1 billion demanding more and more energy each day, China will be a key player in developing and implementing new energy technologies to scale back greenhouse gas emissions.

In the new RFF issue brief "Technology Transfer to China to Address Climate Change Mitigation," Takahiro Ueno, of Japan’s Central Research Institute of Electricity and Power Industry, examines several case studies of technology development and diffusion in China to see how domestic and international policies can be designed to accelerate effective technology transfer.

Understanding the best environments for technology transfer will help China and the rest of the world as a post-Kyoto international treaty is developed. Ueno says that while agreements for technology development and use can’t be the only facet of a treaty, they will play a large role. Moreover, he says, they have a history of breaking down along a philosophical divide. Ueno writes:

Developed countries typically argue that technology transfer occurs commercially and the role of national governments is to create business and regulatory environments that enable commercial activities. For them, intellectual property rights protection is the core of enabling environments for technology transfer.

On the other hand, developing countries emphasize the role of public assistance by developed countries. Even if they agree on the critical and central role of the private sector, they continually request large-scale public funding from developed countries. In addition, they believe that protection of intellectual property rights makes technologies less accessible and affordable and request special treatments such as compulsory licensing.

He argues an infrastructure for transfer will benefit both developed and developing nations, with China able to implement emissions reduction technologies while exporting affordable products to allow other nations in doing the same. Additionally, that a workable plan to aid in the diffusion of technologies in China will likely include policies that address numerous concerns including:

Intellectual Property Rights (IPR) In the cases he studied, protection of IPRs is not a barrier for technology transfer, at least, not for China. According to Ueno, flexible treatment of IPRs such as compulsory licensing is likely to be irrelevant for further enhancement of technology diffusion and local production in China.

Incentivizing and Funding the Diffusion of Technology Whether through subsidies, tax incentives, or outright payments, the Chinese government has stepped in to aid in the deployment of the technologies explored by the author. International funding structures, like the Clean Development Mechanism also have a role to play, says Ueno, though their direct impacts are less clear.

Domestic Targets and Regulation By setting clear regulatory policy and designing plans for implementation, the Chinese government can further accelerate technology diffusion. The author suggests that developed countries can provide technical assistance that facilitates formulation and implementation of such polices and programs.

Ensuring Quality To address product quality concern and increase the production of more specialized components and products in China, Ueno says the government should consider establishing product standards that are comparable to those in the foreign markets where they will be sold.