220219 K. Wennberg, C. Sandström (eds.), Questioning the Entrepreneurial State, International Studies in Entrepreneurship 53, https://doi.org/10.1007/978-3-030-94273-1_12 J. Grafström

220of failure like low grid connectivity, with some years averaging 15% of generation capacity broken or unconnected to the grid (Zeng et al., 2015; Karltorp et al., 2017). Technological innovation has been marginal compared to Chinese industrial activity. Chinese firms have had few patents granted internationally, both in absolute terms and relative to the number of applications (Li, 2012; Lam et al., 2017). Exports are small due to quality issues, even though domestic production capacity far exceeds demand (Xingang et al., 2012; Sun et al., 2015; Zhang et al., 2017).

Mazzucato (2015) addressed Chinese green development, stating that green transformation leaders exist where the state plays an active role. To an extent, she is right about China, which has constructed a lot of wind power. However, quality has been low and little new technology has been internationally patented. Green development has been ineffective, and it would not be a surprise to discover the environment had suffered due to mass industrial activity, especially considering the alternative cost of malinvestment. Government action has actually stifled technological development rather than promoting it. As shown by McAfee (2019) and Grafström and Sandström (2020), the trend in Western economies is to extract much more from less. Economic development is not driven by more resources; resource-use actually decreases while economies have expanded. Chinese wind power has economized resources badly; resource-waste has been the result.

This chapter explores the recent history of Chinese wind power expansion, focusing on development since 2000. A literature review explores two main topics: wind curtailment and technological development, both examples of unproductive entrepreneurship induced by China’s central government. During the highly likely global transition to green energy, it is important to understand what not to do.

It is important to emphasize that China is not the only country that has produced bad results when implementing industrial policies to promote renewable energy. In the early 1980s, wind power policies in the United States had similarly negative outcomes, but on a smaller scale (Keller & Negoita, 2013; Wiser & Millstein, 2020). The German Energiewende and the Spanish solar bubble also have received criticism (Del Río & Mir-Artigues, 2012; Nuñez-Jimenez et al., 2020).

This chapter, however, focuses on China because it is the largest producer of wind power. It is important to remember that drawing lessons from the Chinese example is perilous because what is true in China is not necessarily true for Western countries. Investment in wind power does not represent direct investment from the Chinese state, but rather from China’s Central State-Owned Enterprises (CSOEs). One might assume some autonomy for the CSOEs but they answer to the state, in some capacity, at the end (Zhu et al., 2019). Wind power policy must be understood within the broader context of a highly regulated system in which prices are politically or administratively influenced, if not determined.

A cartoon in the Soviet satirical journal Krokodil in 1952 displays the downside of heavy state intervention in the economic system. A worker and a bureaucrat stand beneath a massive 2000-kilo nail. The worker asks about the need for such a big nail and the bureaucrat answers, “the month’s plan fulfilled” (Nove, 1986, p. 94). The lesson is that incentives matter. When studying the Chinese wind power development of the last decade, it appears the production was, due to state goals, just as Less from More: China Built Wind Power, but Gained Little Electricity

221quantity oriented as the useless 2000-kilo nail in Krokodil. State goals distorted entrepreneurship toward suboptimal solutions, low-energy production, and plentiful resource waste.

The Context: China’s Historical Wind Power

2

Development

Global installed wind capacity in 2020 reached 744 gigawatts, up from 597 gigawatts in 2018 (WWEA, 2019, 2020). Globally, 93 gigawatts were installed compared to 52.5 gigawatts in 2018. China’s accumulated wind power capacity in 2020 was 290 gigawatts, which then produces energy when operational (WWEA, 2020).

China’s early wind power development was gradual. In the 1970s, wind power development was limited to geographically remote, small, off-grid projects (Liu et al., 2002; Xu et al., 2010). In 1985, four grid-connected wind power plants were constructed using 55 kW Vestas turbines from Denmark (Zhengming et al., 2006). In 1994, The Ministry of Electric Power ordered a 100-fold increase in installed wind power capacity, from about 10 megawatts to 1000 megawatts for the year 2000. The plan was not fulfilled because only 350 megawatts were constructed. A remedy to the production failure was the Renewable Energy Law of 2006, which forced utilities to purchase (or produce) wind power (Gosens & Lu, 2013). The central government established a price guarantee that exceeded 15% of construction costs, which incentivized the construction of unprofitable plants (Lema & Ruby, 2007). Firms made unprofitable bids on construction sites paid by cash flow, from things like coal, to sustain wind projects. In 2004, China’s accumulated installed wind capacity reached 769 megawatts, the world’s tenth-highest (Zhang et al., 2013). During China’s Eleventh Five-Year Plan period (2006–2010), challenging goals were set. The installed capacity was doubled for 5 years in a row (Sun et al., 2015). In 2012, China bypassed U.- S. installed capacity (see Fig. 1). The installed capacity of a power system represents the maximum capacity that can be produced under good conditions. A plant with 1 MW of installed capacity can, under ideal conditions, produce a maximum of 1 MW at any one time. Measures of electricity generation describe the amount of electricity that is produced during a specific period, normally measured in megawatthours. Although a large generation capacity was constructed in China, the output did not materialize at an equal rate. For example, electricity generation in the United States was initially significantly higher than China (see Fig. 2). Lu et al. (2016) found that