China and Europe’s Partnership for a More Sustainable World

Cover of China and Europe’s Partnership for a More Sustainable World

Challenges and Opportunities

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Synopsis

Table of contents

(18 chapters)

Prelims

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Part I Europe and China Integration through Trade and Foreign Direct Investments

Purpose

We aim to comb the current policies that have been developed to promote the environmental industries in China and analyze them in a comparative manner.

Methodology/approach

We mainly use the method of text study to study the existing policies that Chinese central government published to promote the development of environmental industry. We built a database of policies and regulations from 1979 to 2015 by searching the official website of the Ministry of Environmental Protection of China.

Findings

We find that the existing policies focus on command and control approaches. Policies are more oriented to the stage of production instead of stages of investment and consumption. They rely more on negative incentive when stimulating supply and positive incentive when encouraging demand. Based on existing academic wisdom, we suggest that Chinese government should pay more attention to environmental economic policy and to stimulating demand for environmental products.

Originality/value

Few studies provide a systematic overview of the policy systems that have been developed to promote environmental industry in China in a systematic manner.

Purpose

This chapter seeks to analyze trade in environmental goods between China and the EU and highlight prominent problems and future opportunities.

Methodology/approach

We explore trade empirically, based on the definition of environmental goods proposed by OECD and database from UN COMTRADE (HS96).

Findings

We find that value of trade in environmental goods between China and the EU has increased from $2.759 billion in 1996 to $42.446 billion in 2012, with an average annual growth rate of 21%. Trade is concentrated in Germany, the Netherlands, Italy, France, and Belgium (together accounting for 82%). China has a trade deficit in most categories of environmental goods. Overall, although trade in environmental goods between China and the EU has increased rapidly, the trade structure is unbalanced and the competitiveness of China’s environmental goods trade is still low.

Practical implications

This chapter provides a robust basis for analysis of trade in environmental goods between China and the EU.

Originality/value

Discussions on environmental goods trade are complicated by a lack of clear definition and lack of consistent data. This chapter provides a clear and consistent data set in order to have a robust basis for analysis of this important phenomenon.

Purpose

The objective of this chapter is to provide a first assessment on the evolution of spatial distribution of foreign firms in China.

Methodology/approach

We examine the overall changes in the location of foreign firms in China over the period 1999–2009. Then, we distinguish two time periods, 1998–2001 and 2002–2009 so as to analyze whether foreign firms’ agglomeration across regions has changed significantly after the China’s entry into the WTO (2001) and the first launch of the Chinese government policies to develop western internal areas.

Findings

Our analysis suggests that foreign-invested enterprises (FIEs) with higher foreign capital shares are more geographically clustered in coastal regions than other enterprises with lower foreign capital shares. This group with the highest intensity of foreign involvement in firm capital also experienced the most relevant changes over the decade of our analysis becoming more localized between the core-periphery divide (coastal provinces and the rest of mainland China).

Research limitations

The main limitation refers to poor data availability, data matching problems, and measurement errors in the database used, as highlighted by Nie, Jiang, and Yang (2012).

Practical implications

A general analysis of location patterns and the role of public policies may inform foreign companies in their entry strategy in the Chinese market.

Originality/value

Very few studies have explored location patterns with detailed geographical data and, at the same time, with data disaggregated by foreign ownership shares.

Purpose

The objective of this chapter is to explore the experience of EU companies in the environmental protection sector in China focusing on their difficulties and the mitigating strategies mobilized.

Methodology/approach

We adopt a qualitative, case study approach, using interview data to explore the liability of foreignness (LOF) experienced by the companies studied and the strategies adopted to overcome LOF.

Findings

We found examples of all categories of LOF identified by Eden and Miller (2004), among our case study companies, but the most problematic and persistent were discrimination hazards. Companies adopted various strategies to cope with LOF, including maximizing the use of local employees, developing relationships with local and national government actors, and establishing partnerships with local companies. None had chosen a combative legalistic approach to the unfair treatment they had suffered.

Research limitations

The relatively small number of cases (six) limits the generalizability of our findings. However, we are convinced that the size of our case companies and their long experience in China mean our findings are well grounded, although more research is needed.

Practical implications

The experience of our case study companies can help to inform the strategy of companies interested in entering and developing the Chinese market.

Originality/value

Very few studies have explored LOF through a case study-based qualitative approach. This research therefore helps to supplement findings from more large-scale quantitative analyses. In addition, there is little research on the LOF of foreign companies in China. Given the growing importance of the market, we believe the question merits further analysis.

Purpose

The chapter aims to examine the number, type, and international presence of European companies (Italian, Spanish, French, German, Dutch, Rumanian, Bulgarian, and English) operating in the renewable energy industries, as well as Chinese companies. Through the analysis of two businesses that have established partnerships and a wholly foreign owned enterprise (WFOE) in China, the chapter identifies the main elements of their management strategies that led to successful operation in China.

Methodology/approach

To analyze the main characteristics and the internationalization of the European firms operating in the renewable energy industry, we collected information from secondary data. To identify the successful business models to operate successfully in China, we adopted a qualitative case study approach, based on direct interviews and information published on the company websites and articles found on the web.

Findings

European enterprises encounter difficulties in approaching the Chinese market, which is rapidly developing as a result of the latest five-year plan setting energy and climate change targets and policies. Indeed, the number of European firms investing in China is low. Through the analysis of two business cases (Asja and Caleffi) that have established partnerships and a WFOE in China, the chapter identifies the main elements of their management strategies that led to successful operation in China.

Research limitations

The relatively small number of cases (two) limits the generalizability of our findings. However, we are convinced that the size of our case companies and their experience in China mean our results are well grounded, although more research is needed.

Originality/value

To the best of our knowledge, this is the first study that has explored the business models adopted by European firms operating in the renewable energy industry in China.

Purpose

The objective of this chapter is to analyze China’s outward foreign direct investment (OFDI) to the European Union in environmental industries.

Methodology/approach

We combine a narrative approach with statistical analysis. We first review the policy background concerning China’s OFDI and environmental protection. Then, we provide statistics on China’s OFDI to the EU in environmental industries, using firm-level data from one of China’s major provinces: Jiangsu.

Findings

We find that the OFDI to the EU in environmental industries experienced a considerable growth in terms of number of investing firms and investment value. The OFDI in environmental industries to the EU was highly concentrated in a few countries, particularly Germany and Luxemburg, and a few industries, particularly new energy.

Research limitations

Using firm-level data from only one province may limit the generalizability of our findings. However, we believe the case of Jiangsu province sheds much light on the situation of entire China because Jiangsu is one of the most important Chinese provinces in terms of OFDI.

Practical implications

The detailed analysis of our Jiangsu’s OFDI in EU’s environmental industries in this chapter can help to inform the investment cooperation in environmental industries between China and EU in terms of both scope of investment partners and target industries.

Originality/value

This study is one of the first to provide a detailed summary statistics on China’s OFDI to the EU in environmental industries. Given China’s growing concerns regarding environmental protection and OFDI, we believe the question merits further analysis.

Purpose

Chinese foreign direct investments (FDI) to developed countries, such as Germany, seems to follow unique rules, which are different to traditional international business (IB) practices in terms of entry modes, speed of internationalization, and target countries. To shed light on these unique rules, we analyze motivation and location choices of FDI from China to Germany by describing a sample of five companies from the environmental industry.

Methodology/approach

A multiple case study research design is adopted. The study is based on five Chinese companies investing in Germany in the environmental industry through FDI (Greenfield Investment and Merger and Acquisition). Chinese managers were interviewed on the basis of semi-structured questionnaires.

Findings

According to the main findings from the interviews, when investing in Germany, managers take into account a series of factors. Chinese firms go global for traditional motives such as market-seeking purposes and with the aim of improving their production process through skills and know-how acquisition. Additional motives, such as labor cost and fiscal incentives are not considered relevant as factors for internationalizing. Entry mode choices are mainly driven by legal factors in the environmental industry.

Originality/value

The analysis is conducted at industry level with the aim to contextualize the results within the environmental sector. The case studies are focused on Chinese investments in Germany.

Part II Environment and Regulations

Purpose

This chapter presents a review about the history of how China’s environmental legal framework was built up.

Methodology/approach

The chapter explores environmental legal framework development through two paths: political path and the associated judicial path. It tries to connect the political slogans of China, under each leadership since the “Opening Up” in 1978, to the legislative development on environmental issues.

Findings

Regardless of each leadership’s political slogans, China’s economic reform and legislative development had always revolved around the objective – “revive China and its economy in the world,” which had been set by Deng Xiaoping. The “sustainable development,” that as a guiding principle, has already been incorporated into Five-Year Plans as well as China’s environmental legislation since economic reform.

Originality/value

Compared with previous research on this area, the pragmatical approach of this investigation confirms the originality of the research. Literature on this topic, in fact, hardly investigates China’s environmental issue by combining the analysis of the political and the legal perspectives.

Purpose

This chapter investigates and explores the array of political and social factors which influence the Chinese system of environmental protection, shedding light on the Chinese political and juridical process in constructing a stricter and more incisive legal framework.

Methodology/approach

Starting by observing national macroeconomic data, this chapter explores how the Chinese governance system affects the implementation of the legal framework of environmental protection. In addition, it also traces a brief panorama of the most important laws framing environmental protection in China.

Findings

Over the years, the Chinese environmental protection system has been strongly affected by the national multilayered governance system. Nevertheless, the initiative launched by China (more intensively starting from the 11th five-year plan) to build a more virtuous environmental protection system now seems to be returning positive results, in both the renewed legal framework and – even more so – in the attempt (through addressing environmental issues) to reform the entire apparatus of national governance.

Practical implications

The multi-structured national system, which hides conflicting political and economic interests at central and local levels, represents one of the biggest problems for China. This chapter argues that only through a deep reform of the national management scheme can China really guarantee a better future for its environment.

Originality/value

Literature on Chinese environmental protection tends more often to investigate the legal aspect when edifying its environmental legal framework. Very few studies combine economic data and political analysis when studying the Chinese legal framework and its implementation.

Purpose

The Chinese electricity sector is in the midst of a transition from a state-owned monopoly to a market-oriented structural unbundling. In the process of restructuring, the power system is facing significant deficiencies which hinder integration of sustainable solutions and dramatically impact the environment.

Methodology/approach

The chapter provides a qualitative analysis of the legislative, regulatory, and administrative provisions that have been recently implemented in the Chinese electricity sector, in order to identify the barriers that limit implementation of sustainable solutions and suggest prospects of change.

Findings

Despite a strong commitment to renewable energy, integration of sustainable solutions in the Chinese power system is hampered by an inefficient coordination between the players variously operating in the electricity sector and a lack of consistency at the regulatory design stage.

Practical implications

A clear picture of the legislative, regulatory, and administrative inconsistencies that characterize the Chinese electricity sector may help Chinese policy makers to overcome issues that hinder efficiency and hence develop a systemic approach useful to make the economic growth sustainable.

Originality/value

The chapter considers integration of sustainable solutions as related to the policy makers’ ability to conceptualize systemic efficiency in relation to an original understanding of proximity between efficient energy systems to be developed on a regional basis.

Purpose

CSR is a relatively new concept which can be defined as the set of rules by which a company equips itself in order to ensure compliance to various regulations, as well as ethical and environmental standards, that have to be addressed in relation to the sector in which it operates. Despite this international definition, it is hard to deal with this notion in a legal perspective. The chapter investigates how the notion is operating in the European and Chinese Green Energy Industry.

Methodology/approach

The approach is functionalist in nature and is based on comparative law method.

Practical implications

The insights about the diverse notions of CSR in the energy industry can be useful for lawyers and compliance managers working in transnational contexts.

Social implications

CSR represents a way of marketing for consumers and society. Understanding the real functioning in the world of affairs beyond the policy declamations may increase the public accountability of the CSR processes.

Originality/value

The functionalist approach based on comparative law method has never been applied to the intertwined issues about CSR in the energy industry.

Purpose

A balance between environmental protection and sustainable development of the energy industry is fostered in the majority of nations. China’s economic growth has been rapid in the past few decades, with the unfortunate side effect of environmental pollution and ecological deterioration in the country. In this chapter, we provide a study of Chinese legal rules about civil liability for environmental damages in the light of objectives of sustainable development of the energy industry.

Methodology/approach

The research approach is based on the Regulatory Impact Assessment.

Practical implications

International funds and private investors, especially those working in FDI, have to cope with the legal framework more or less favorable to investment and innovation deriving from experimentation and development of new energy products and processes. In each jurisdiction, the mechanism of civil liability is crucial in determining such a legal framework.

Social implications

The real functioning of civil liability as applied by the doctrinal and judicial interpretation has to be taken into account for minimizing the mass damages for the environment and individuals.

Originality/value

Different from other assumptions based on administrative rules or policy issues, the balance between environmental protection and sustainable development is considered in this chapter under a view that emphasizes the role of legal rules from a civil law perspective.

Purpose

This chapter outlines the potential market of methane (especially LNG) as vehicle fuel in Europe and China.

Methodology/approach

A comprehensive report on the existing framework in terms of market capacity, regulations, and incentives is presented. Moreover, the feasibility of using biogas as environmental friendly source gas is considered.

Findings

The transport sector represents a major element in the global balance of greenhouse gas (GHG) emissions. Natural gas is considered the alternative fuel that, in the short-medium term, can best substitute conventional fuels in order to reduce their environmental impact, because it is readily available at a competitive price, using technologies that are already in widespread use. It can be used as compressed gas (CNG) or in the liquid phase (LNG). The former is more suitable for light vehicles, while the latter for heavy-duty vehicles. Some barriers need to be overcome for the diffusion of this alternative fuel, especially concerning the supply problem. The incentive policy has been shown to cover a major influence in the feasibility evaluation.

Originality/value

This work shows the state of the art of natural gas as fuel, especially from biogas source, in Europe and China and assesses the incentive scheme necessary to make liquefied biomethane feasible on the basis of the existing scenario in Italy.

Purpose

Currently heating and cooling in buildings is responsible for over 30% of the primary energy consumption in the United Kingdom with a similar amount in China. We analyze heat pumps and district thermal energy network for efficient buildings. Their advantages are examined (i.e., flexibility in choosing heat sources, reduction of fuel consumption and increased environmental quality, enhanced community energy management, reduced costs for end users) together with their drawbacks, when they are intended as means for efficient building heating and cooling.

Methodology/approach

A literature review observed a range of operating conditions and challenges associated with the efficient operation of district heating and cooling networks, comparing primarily the UK’s and China’s experiences, but also acknowledging the areas of expertise of European, the United States, and Japan. It was noted that the efficiency of cooling networks is still in its infancy but heating networks could benefit from lower distribution temperatures to reduce thermal losses. Such temperatures are suitable for space heating methods provided by, for example, underfloor heating, enhanced area hydronic radiators, or fan-assisted hydronic radiators. However, to use existing higher temperature hydronic radiator systems (typically at a temperatures of >70°C) a modified heat pump was proposed, tested, and evaluated in an administrative building. The results appears to be very successful.

Findings

District heating is a proven energy-efficient mechanism for delivering space heating. They can also be adaptable for space cooling applications with either parallel heating and cooling circuits or in regions of well-defined seasons, on flow and return circuit with a defined change-over period from heating to cooling. Renewable energy sources can provide either heating or cooling through, for example, biomass boilers, photovoltaics, solar thermal, etc. However, for lower loss district heating systems, lower distribution temperatures are required. Advanced heat pumps can efficiently bridge the gap between lower temperature distribution systems and buildings with higher temperature hydronic heating systems

Originality/value

This chapter presents a case for district heating (and cooling). It demonstrates the benefits of reduced temperatures in district heating networks to reduce losses but also illustrates the need for temperature upgrading where building heating systems require higher temperatures. Thus, a novel heat pump was developed and successfully tested.

Purpose

In order to verify the feasibility of different techniques, this chapter further studies the adaptability of two massive straw biomass applications in rural areas in China.

Methodology/approach

The methods of assessing biomass power generation project with Life Cycle Assessment (LCA), survey and field test of one biogas station, and game-theoretic analysis are adopted.

Findings

The following conclusions can be drawn: The air pollution costs account for more than 60% of the total environmental cost, followed by depreciation expense and maintenance fee of 18%, compared to that of biomass power generation at 0.01711 CNY/kWh. The adopted greenhouse sunlight technology of Solar Biogas Plant in Xuzhou, China, raises the inside average temperature by 11.0 °C higher than outside and keeps the pool temperature above 16 °C in winter, ensuring a gas productivity of biogas project in winter up to 0.5–0.7 m3/m3 by volume. This chapter also analyzes the information cost incurred by asymmetric information in biomass power generation via game theory method and illustrates the information structure with game results. It provides not only a foundation for the policy research in promoting straw power generation but also theoretical framework to solve the problem of straw collection.

Social implications

These studies will propose solutions to relevant problems arisen in the running process.

Originality/value

These studies are all based on real cases, field research, and appropriate theoretical analyses, so, they can reduce the relevant costs and promote the application of relevant technologies.

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Purpose

This chapter will introduce three novel technologies demonstrated in Sino-Italian Green Energy Lab of Shanghai Jiao Tong University for the hot summer and cold winter climate zone.

Methodology/approach

Experimental and modeling works have been conducted on the application of these systems. A comprehensive review on the features of these novel technologies, their adaptability to local climate condition have been carried out, and some initial study results have been reported.

Findings

Solar PV direct-driven air conditioner with grid connection, home used small temperature difference heat pump, smart house energy information and control system are appropriate energy technologies with reduced CO2 emission, which can be applied efficiently in the hot summer and cold winter climate zone. More useful data will be obtained in the future demonstration tests in Sino-Italian Green Energy Lab.

Originality/value

This work shows combining renewable energy technologies and information technologies is crucial to improve the energy efficiency and the comfortableness for indoor environment.

Index

Pages 297-304
Content available
Free Access
Cover of China and Europe’s Partnership for a More Sustainable World
DOI
10.1108/9781786353313
Publication date
2016-12-22
Editors
ISBN
978-1-78635-331-3
eISBN
978-1-78635-331-3