Subsidization in China's renewable energy sector: Negotiability as the norm

Abstract

The Chinese government's decision to push for large-scale build up of renewable energy capacity was followed by a range of industrial policies to support this change of track. Most importantly, various forms of subsidies were launched to support both industries and markets. While important new research has added to our understanding of China's state capitalism by documenting the depth and breadth of subsidies to solar PV manufactures, very little attention has been paid to how subsidies are determined and how companies influence these processes. This article takes a neo-institutional perspective with the aim of understanding the institutional context for the interplay between companies and Party-state, and the norms established through this interaction. It explores two cases, the biomass and solar industry, and shows how subsidies are perceived as being negotiable. Understanding this negotiability of subsidies as an institutionalized norm helps us understand both an important factor shaping China's renewable energy sector and the wider dynamics of state capitalism in China.