Economist: Clean tech in China

Green shoots

A new venture hopes to promote clean-technology investment in China

CHINA is not feted for its stewardship of the environment. One recent World Bank report found that 16 of the world's 20 most polluted cities were in China; and a draft version of another puts the total economic cost of outdoor air and water pollution at around $100 billion a year, or 5.8% of China's GDP. By some estimates, China has now overtaken America to become the world's largest producer of greenhouse gases. Environmental protests, such as one that took place in Xiamen last month in response to a plan to build a chemical plant in the city, are on the rise.

The pollution that has resulted from China's growth is a huge problem, but to investors it presents an enormous opportunity. Venture-capital investment in clean tech in China is picking up, increasing by 147% from $170m in 2005 to $420m last year, according to the Cleantech Group, an industry research body. Most of this investment was in solar energy, a booming field in which several Chinese firms have gone public in the past year. But though China has now become the world's third-largest manufacturer of solar panels, most of them are exported, thanks to the subsidies offered in the developed world.

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