China’s continued expansion of its oil refining sector and its environmental policies often appear contradictory. On the one hand, it is the world’s leader in electric vehicle (EV) manufacturing and deployment, but on the other it continues to invest heavily in domestic refining capacity to produce the fuels that power EVs’ internal engine combustion competitors. China’s push into EVs risks stranding assets built today well before the end of their natural lifespans.
But there is method in the apparent madness. The policies are in fact complimentary. Both are part of the government’s approach to energy security, which is itself bound up with key industrial goals.
Nowhere else but China does the development of climate change solutions have such immediacy, owing to local air pollution and traffic congestion, resulting from the country’s rapid urbanisation and dependence on coal-fired power generation. Nowhere else is as well positioned to take advantage, owing to its powerful manufacturing base, increasing capacity to innovate and need to move into higher-value industries.
The significance of firms like Huawei and Xiaomi is not the security concerns they may or may not represent, but the technological challenge they pose. Most worryingly for many Western observers, they have emerged from a state-led economy in which innovation is not supposed to thrive.
They serve to emphasis the stark differences between laissez faire…