China Light and Power's Peter Littlewood spoke Thursday at an event sponsored by the Joint Program on the Science and Policy of Global Change and the MIT Energy Club. His presentation — The Chinese Dragon and the Indian Elephant — compared these fast-growing economies and dissected what makes them tick. Focusing heavily on China, Littlewood found that China's growth is due largely to its unique character, and that its fortes should position the nation as a strong partner to the United States.
China's character: an economic asset
While India and China economically remained on equal footing for centuries, in the 1970s and 1980s China began to grow rapidly due to relaxed government regulations that allowed its personality to shine through, Littlewood said.
"China is a nation of natural entrepreneurs," he said. "Economics is more important than politics. Responsibilities are more important than rights. The government does not need to encourage people to form businesses, all they have to do is reduce controls. When controls are reduced, businesses spring up and the economy takes off."
Littlewood described how China has become a world power that effectively uses its resources, has built good infrastructure and has mastered technology. It has accomplished all of this while maintaining high savings and low production costs.
One of China's major industries is coal. During the past seven years, China has doubled the amount of coal it produces — making the country the source of about half of the world's coal.
When economies develop this quickly, there are problems. One of China's — and India's — major problems is pollution.
"I can confirm from personal experience that the air is not fit to breathe. If you walk out of the airport in Delhi you can actually taste the sulfur in the air," Littlewood said. "In Beijing there are some days where you can hardly see from one side of the road to the other side of the road."
But while coal is still a major industry, China is rapidly expanding cleaner sources of power. The country now contains the largest-capacity hydroelectric plant, the most ambitious nuclear power program, and the fastest-growing wind power in the world. In 2010 alone, China invested $26 billion in wind power.
"This shows the ability of China to get things done," Littlewood said.
The United States and China: rivals or partners?
When it comes to manufacturing and funding clean-energy projects, China has replaced the United States and Europe in recent years, according to Littlewood's research. But the United States is still the nation developing the ideas — the patents — and supplying the cash, or venture capital.
"The U.S. is the most creative place in the world. This is where we come for good ideas. This is where we come to see into the future, to see what we are going to be building in five or 10 or 15 years time," Littlewood said. "China is where products get financed, where equity comes from, and where manufacturing takes place at the lowest possible cost. You could say the U.S. is the front office, China is the back office. The U.S. finds solutions, China develops them."
This relationship where the United States is supplying the ideas and giving them to China to produce is beneficial to both sides, Littlewood said. He uses the example of Apple, where consumer product concepts are developed in the United States and products are made in China. Yet, still about 80 percent of the profits are in the United States.
"That's a partnership, it's not a rivalry. It doesn't have to have winners or losers. One country doesn't have to tell the other country what to do," he said.
Littlewood said entrepreneurs in both countries should cut across political divides and build a mutually beneficial partnership.