Category: Society & Economics
Key figures: Shi Zhengrong (Suntech Power), Chinese Ministry of Environmental Protection, National Development and Reform Commission (NDRC), Ma Lingjuan (NEA), Zhu Rongji (architect of 2005 Renewable Energy Law)
Summary
By 2007, China had positioned itself as a rapidly expanding force in renewable energy manufacturing and deployment, particularly in solar photovoltaic (PV) and wind-power sectors. In 2007 alone, Chinese manufacturers produced approximately 820 megawatts of solar PV panels—second globally only to Japan—and the country installed an estimated 3.3 gigawatts (GW) of new wind-power capacity, bringing cumulative installed wind capacity to approximately 5.9 GW by year-end, a near-doubling from 2006’s 2.6 GW. The policy foundation was the Renewable Energy Law (2005), which mandated renewable-energy targets and established grid-connection guarantees; by 2007, this framework accelerated through regulations requiring 70-percent domestic content in newly installed wind facilities. China’s six largest solar companies had achieved a combined valuation exceeding $15 billion, reflecting rapid capital concentration and technological investment. The year marked an inflection point: China was transitioning from a marginal player in renewable energy to the country that would, within a decade, hold near-monopoly over global supply chains for panels, turbines, and rare-earth inputs.
Policy Framework: The Renewable Energy Law and Its 2007 Acceleration
The legal architecture for China’s renewable transition originated with the Renewable Energy Law of the People’s Republic of China, enacted February 28, 2005, and effective January 1, 2006. The law established:
- Mandatory grid connection: grid operators were required to purchase all electricity generated by certified renewable facilities, eliminating market-access uncertainty for investors.
- Feed-in tariff framework: the National Development and Reform Commission (NDRC) set preferential purchasing prices for wind and solar electricity above market rates.
- Financial incentives: tax reductions, low-interest loans, and R&D support for qualifying manufacturers.
In 2006, the NDRC issued the Preferential Wind Electricity Industry Policy, which required that 70 percent of wind turbine components be manufactured domestically—a measure that effectively forced foreign turbine makers (Vestas, GE Wind, Gamesa) to localize production, simultaneously building domestic manufacturing expertise and protecting nascent Chinese turbine firms such as Goldwind, Sinovel, and DEC.
By 2007, China’s 11th Five-Year Plan (2006–2010) explicitly targeted 5 GW of installed wind capacity by 2010—a target already exceeded by year-end 2007—and 300 MW of solar PV. The rapid overachievement of these targets prompted upward revisions; the 2007 Medium and Long-Term Development Plan for Renewable Energy raised the 2020 wind target from 20 GW to 30 GW (an amount China would exceed by 2010).
Solar PV Manufacturing Surge
China’s solar PV industry was dominated by a handful of companies with NYSE listings—an unusual capital structure for Chinese industrials of the era:
- Suntech Power Holdings (founded 2001, NYSE-listed December 2005): founded by Shi Zhengrong, an Australian-educated solar scientist who returned to China. By 2007 Suntech was among the world’s top five solar panel producers; Shi had become China’s first billionaire from a solar-energy business, with a reported net worth of $2.2 billion as of early 2006 (Forbes).
- Yingli Green Energy, Canadian Solar, JA Solar, and Trina Solar all raised capital on U.S. exchanges between 2005 and 2007, giving Chinese solar manufacturers access to global investment while remaining manufacturing-rooted in China.
China’s 820 MW of PV production in 2007 was almost entirely export-oriented: Germany, Spain, and Italy drove demand through generous feed-in tariff programs, while China itself had negligible domestic solar installations (the domestic market only accelerated after 2009’s Golden Sun Program and 2011’s feed-in tariff for utility-scale solar). This export model allowed Chinese manufacturers to scale production rapidly—and absorb learning-curve cost reductions—without depending on domestic policy timelines.
Key cost advantages: lower labor costs, government-subsidized land and utilities, access to low-cost financing through state-owned banks, and vertical integration into polysilicon supply. German and Japanese manufacturers faced fundamentally different cost structures; Chinese panel prices began undercutting them as early as 2008, precipitating a trade-dispute cycle in the 2010s.
Wind Power: Rapid Domestic Deployment
Wind power saw even more dramatic growth in absolute capacity. China’s cumulative installed wind capacity trajectory:
| Year | Installed Capacity (GW) | YoY Growth |
|---|---|---|
| 2004 | 0.76 | — |
| 2005 | 1.27 | +67% |
| 2006 | 2.60 | +105% |
| 2007 | 5.91 | +127% |
| 2008 | 12.21 | +107% |
The 2007 doubling was driven by a combination of the 70% domestic content rule (which channeled investment into Chinese turbine production) and the concession-bidding system for large wind farms—a tendering approach that used competitive lowest-price procurement to drive down per-MW costs. Inner Mongolia, Xinjiang, and Gansu provinces hosted the largest installations, chosen for consistent wind resources.
Chinese turbine manufacturers grew from assemblers to innovators during this period. Goldwind Science & Technology, founded in Urumqi in 1998, had licensed technology from German firm REpower Systems and by 2007 was producing multi-megawatt turbines with increasing domestic content. Sinovel, incorporated in 2006, scaled rapidly with state backing. By 2010, Sinovel and Goldwind were among the world’s top-five turbine manufacturers by annual shipments—a transformation accomplished in under five years.
CO₂ Context and International Pressure
The policy impetus extended beyond industrial strategy. In 2006, China surpassed the United States as the world’s largest emitter of carbon dioxide by annual volume, according to Netherlands Environmental Assessment Agency data published in June 2007. China emitted approximately 6.2 billion tonnes of CO₂ in 2006 versus 5.8 billion for the United States—a milestone that intensified international diplomatic pressure ahead of the UN climate conference (COP13 Bali, December 2007).
The IPCC Fourth Assessment Report (AR4), released in four volumes throughout 2007, concluded with unprecedented confidence (90% probability attribution) that anthropogenic greenhouse gas emissions were the primary driver of observed warming since 1950. China’s position as both a major emitter and a developing nation exempt from Kyoto Protocol binding targets placed it in a politically complex position: it faced pressure to commit to binding reductions while arguing that developed nations bore historical responsibility and should act first.
Domestic air quality crises—severe PM2.5 pollution in industrial cities such as Linfen (Shanxi), routinely ranked among the world’s most polluted—provided parallel political motivation for the energy transition independent of international climate diplomacy. The State Environmental Protection Administration (upgraded to the Ministry of Environmental Protection in 2008) reported in 2007 that 16 of the world’s 20 most-polluted cities were in China. Renewables offered a route to reduce both CO₂ and local air pollutants simultaneously.
Supply Chain Implications and the Road to Dominance
The strategic logic that shaped Chinese industrial policy from 2005 onward—capture manufacturing, secure raw materials, build scale—had by 2007 already begun creating the supply chain dependencies that would define global energy geopolitics in the 2020s. China holds approximately 60 percent of global rare-earth reserves and by 2007 controlled roughly 97 percent of rare-earth production, relevant for permanent magnets in wind turbines and thin-film solar cells. The government recognized this leverage explicitly in policy documents.
The 2007 renewable energy surge also coincided with the beginning of the global commodity supercycle peak: oil prices were rising toward $100/barrel (reached in late 2007), and coal remained expensive relative to 2004 levels. This price environment made renewable energy increasingly cost-competitive in a way that earlier projections had underestimated. China’s oil import dependence—it became a net oil importer in 1993—gave renewable energy an explicit energy-security rationale alongside environmental and industrial-policy rationales.
By 2010, China installed more wind and solar capacity annually than any other country. By 2013 it surpassed the United States in cumulative renewable capacity. By 2020 it held approximately 35 percent of global solar PV production capacity and 55 percent of wind turbine production, with near-complete dominance over polysilicon refining, wafer cutting, and cell assembly for solar panels. The 2007 moment—when China was second, not first, in solar manufacturing, and when wind capacity was doubling but still below leading European nations’ totals—was the last year in which the trajectory was not yet obvious to most Western energy analysts.
Sources
- Wikipedia: Renewable energy in China — overview of renewable-energy development and policy milestones.
- Environmental Defense Fund + Energy Foundation China (November 2007 / March 2008): China Emerging as New Leader in Clean Energy Policies — contemporaneous fact sheet on 2007 policy and manufacturing status.
- IEA (International Energy Agency): Renewable Energy Law of the People’s Republic of China — text and analysis of the 2005 law and 2007 implementation.
- UNESCAP: China’s Renewable Energy Policies — policy document detailing renewable-energy legislation and industrial targets.
- Yale Environment 360: How China Became the World’s Leader on Renewable Energy — long-form analysis placing 2007 in the trajectory from minor player to global dominance.
- Netherlands Environmental Assessment Agency (June 2007): China surpasses US as world’s largest CO₂ emitter — cited in multiple IPCC AR4 and UN reports; Netherlands PBL archive.
- Wikipedia: Suntech Power — Shi Zhengrong biography and Suntech’s NYSE listing and early production scale.
- Global Wind Energy Council (GWEC): Annual wind statistics 2004–2010 — cumulative installed capacity figures by year.