The Political Logic of Reshoring in Low Carbon Technologies: Economic Interdependence and Green Industrial Policy
44 Pages Posted: 31 Mar 2022
Date Written: March 1, 2022
China’s ability to use process innovation in manufacturing made the country a key player in the clean tech sector. Specifically, China’s dominance in solar and battery manufacturing has triggered political discussions in Western capitals about re-offshoring from China to alternative locations, and possible reshoring to geographies closer to home. The paper catalogues and assesses policies put in place in China, Europe, Japan, and the United States to incentivize reshoring and re-offshoring. It then explores whether and to what extent these measures are likely to impact the geography of select low carbon technologies. The report finds that most policy measures in place aim at diversifying supply chains and improving domestic competitiveness rather than outright reshoring. Nonetheless, some policies explicitly aim at reshoring, including EU and US tariffs on Chinese solar PV modules. We argue that the effects of potential reshoring measures are a function of technology complexity and their geographical concentration. In light of this, the paper discusses the possible implications of reshoring measures for climate change and economic development. It draws conclusions for policy based on a public interest approach, focusing on national competitiveness and industrial policy; climate change; and upgrading as part of the development imperative.
Keywords: China, reshoring, supply chains, energy transition, upgrading
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