The article touches on many reasons that China has an advantage over other countries in the field of energy. The government pushes power companies to be more efficient and provides subsities for people who are installing solar panels etc. i think that this helps business with a comparitive advantage, but cannot really be the only factor. Another big adavantage is that China is still trying to catch up with the rest of the world. They are just starting to build their large power plants and have no incentive to keep using outdated facilities to save money. The US and other countries must decide whether or not to move on from facilities that are built and set up, but are not the greenest, while China is able to start from scratch and go straight in to the newest innovations. This makes it much easier to move the technology forward and not stagnate. Another reason China is pushing towards making more energy is because they will need it. China is a country that is growing very quickly and is using a lot more power for all kinds of things and will continue to need more power. Perhaps China's greatest advantage is the low wages that workers earn. Producing the power there is a lot cheap than producing it in other parts of the world.

The most interesting aspect of the article is that what it describes in China is the same as every other country basically. China is just faster and better at it than everyone else, so European and U.S. politicians complain about it. I don't think the article gives enough info on the Chinese economy to make any statement on comparative advantage off it alone. The government could try and give special tax status to a nation's area of comparative advantage, to keep it that way, like taxing it less than other areas. If China becomes the clean tech hub, then I think off reputation and the ability to set-up distribution chains greater and farther in extent than anyone else might be what will help them hold on to it. Then those company's that have that advantage can buy out other companies getting in the business, and lots of people will get in the business simply to sell to them. Plus that advantage that comes from having been in the business earlier becomes a barrier to entry almost. I can't think of many reasons why places that for some reason become the hubs of industry's, like stock trading in new York, movies in Hollywood, tech in silicon valley or anything else stay that way.

I am going after ? #2 in this post. i am not sure if i am reading it correctly so i might be off the mark. Feel free to correct me. I don't believe that Comparative Advantage can be created by Govn't, but i do believe that it can be enhanced. If the U.S produces only two things, computer chips and ninja weapons, the Govn't can give subsidy if they just want the country to focus on ninja weapons or on chips. And from what I have seen that is exactly what they do. I know everyone wants more ninja weapons in their life, but as an entrepreneur if you had to chose between opening a heavily subsidized chip factory or a heavily taxed weapons factory you are going to put your capital where it is treated best. So i do believe that the govn't can effect comparative advantage with their actions

China has a large labor market with competitive lower labor costs. China has the incentives to exploit new energy and develop the renewable energy because of its huge demand of energy and risk of future energy supply. Chinese government actively gives policy, regulation and financial support on new energy exploitation and application of renewable energy. Comparative advantages can be enhanced by government’s decision making. As the essay mentions, Chinese government spends heavily to upgrade the electricity grid and also intensely focuses on energy policy with the aim of dominating energy-equipment export. These actions will effectively promote the R&D on new energy and therefore create the comparative advantage in world export market. Although putting new energy and renewable energy into use is comparatively expensive, China has the ability to reduce the costs through mass production using their cheaper labors. It will not easier for China to retain the status of being the center of clean energy technology because other countries will come up to share the market. It is no doubt that we live in an energy era and energy is very important for a country’s future economic development, so China can earn many profits at the very beginning when they dominate the clean energy market, but they will face big challenges to retain their status to be competitive in export market in the long run.

1. The comparative advantage for China is the production of renewable energy because of the lowest opportunity costs:
• First of all China has low labor costs (as stated in the article “China’s labor costs are an advantage in energy”). And that’s why China is able to produce and to sell renewable energy at lower costs than other countries. That is a reason why other countries could not affect China’s competitiveness.
• There is a big demand because there is a great population in China and the population will grow further in future. Furthermore there are also other countries in the world which need renewable energy to a low cost which China can provide. That means that China can produce a large volume of renewable energy and get enormous efficiencies from a large-scale production (scale economies). Scale economies are very important because investments for renewable energy are very cost-intensive.
• China can utilize from the low bank loans (just 2%) needed for the investments to buy new equipments and it can utilizes from the government’s subsidies to build their large power plants. Also the population’s demand is growing because gives financial support to the people who wants to install solar panels etc.

No 2)
I´m not sure if the article provides enough information to decide if China has a comparative advantage or not but I agree with Timi when he says that the comparative advantage can´t be created be the government, but I also think it can be enhanced.
China has a lot of advantages in producing Clean Energy especially the low labour costs and reduced costs through mass production and the government is pushing the advantages thru taxes, subsidies and financing possibilities. But without any given precondition I guess it is very difficult for a government to create a comparative advantage.
But one exception may be investments in education. If a government wants to create a comparative advantage through a well-educated workforce, it has to invest huge amounts in schools, universities, teachers and professors. In this case maybe it is easier to “create” comparative advantage.

The theory of comparative advantage is defined as "the ability of a party (an individual, a firm, or a country) to produce a particular good or service at a lower opportunity cost than another party". Since China is able to produce renewable energy at a lower opportunity cost than other nations, (lower opportunity cost because of low labor costs, low interest rates on loans, government subsidies, etc), it is fair to state that China has a comparative advantage in the clean energy technology sector. I do not believe that comparative advantage can be created by governmental action, but I do think that it can enhance comparative advantage. China enhances comparative advantage in the clean energy sector by encouraging citizens to pursue utilizing renewable energy sources such as wind, solar and biomass, through provisions of government subsidies for individuals and firms who employ such methods. This allows China to have the leading edge on clean energy, because the costs for renewable energy are now less for firms in China than for firms in other countries like the U.S. Because China has made a name for itself on the world stage as a center for renewable energy, so because of their head start, retaining that status will be easy until other countries start catching up to that standard as well.

If the theory of comparative advantage is applicable then China's comparative advantage lies in cheap labor costs and booming power market in china created by high future demand of energy. Comparative advantage can be easily enhanced by the government as it can provide more subsidies that can further encourage individuals or firms to attain economies of scale which further would reduce the cost by mass production. Also, the government is providing bank loans at just 2% which has a huge impact in cutting the cost and then further achieving comparative advantage. It will be easy for China to maintain its status of clean technology center in future as China has an advantage of going in the renewable energy at an early stage and also achieving high production with advancement.Once China would have built the empire of clean technology, it would be harder for the other countries to achieve the same position because of the barriers to entry. Though, the other countries will catch up to the china's progress but it would require huge capital and time which would ensure china to maintain it's clean technology status for a much longer period.

I would like to take what appears to be the dissenting opinion, and argue that in some cases the government can create comparative advantage. Furthermore, I believe that the actions taken by the Chinese government in the clean energy market is such a case of how government can create a comparative advantage.

Does China have comparative advantages in labor and economies of scale? Yes. But I would argue that their type of government creates another comparative advantage. When a relatively new market emerges, such as the market for clean energy technology, governments tend to be the social mechanism for regulating the new industry. This is done through legislation. China's one party political system gives them a comparative advantage over two party systems. This is due to the fact that passing legislation can be done faster and with less political contention than is possible in, for example, the U.S., where the political system is split by two parties and the climate is much more contentious. Therefor, China has a comparative advantage over the U.S. because it can create and institute legislation faster, or in other words, “cheaper”.

Furthermore, many of the previous posts talk of China's government as using “incentives”, which it is doing. But it is also using its very powerful, and centralized, governmental control to mandate laws that demand certain things be done. For example, “Regulators have set mandates for power generation companies to use more renewable energy.” This is not an optional incentive, nor is charging “a renewable energy fee to all electricity users”. The high amount of governmental power being utilized leads me to believe that without it the advantages of labor and scale would not be enough to sustain an overall comparative advantage in the clean energy market.

Continued in next post...

To quote the article, “China’s commitment to renewable energy is expensive. Although costs are falling steeply through mass production, wind energy is still 20 to 40 percent more expensive than coal-fired power. Solar power is still at least twice as expensive as coal.” I tend to think that the costs are being overcome not by cheap labor and economies of scale, but by strong governmental regulations.

In closing I would like to note that I have tried to base my analysis on looking at the situation in a positive, not normative, light. While I think the one party system of China is responsible for their comparative advantage in this situation, I most certainly do not think it is a good system overall. In short, I believe that the gains of a one party system (in this case a communist one) are far outweighed by the costs.

After reading the article, I do strongly believe that China does have a strong comparative and possibly absolute advantage over the U.S. in renewable energy. The reason for China's advantages over the U.S. lies in its strong labor force and rapidly growing capital.
We all know that U.S. hands down loses to China in terms of labor. China has an abundant population compared to the U.S. The only thing China is slightly lagging in the labor sector is the human capital which is education. However, even the level of education that the Chinese people have is quickly improving and spreading throughout its population. The main point is China has a lot more people they can utilize in terms of mass production. Furthermore, their prices of labor there is much cheaper as well.
That leaves us with with capital. In regular terms U.S. wins in this sector. The U.S. is much more technologically developed than China. There are tons of factories and offices of multinational business in almost all parts of the U.S. However, in terms of renewable energy I don't believe U.S. has that much more capital than China. The article has stated that the U.S. power companies "frequently face a choice between buying renewable energy equipment or continuing to operate fossil-fuel fired power plants that have already been built and paid for." This means that the U.S. really doesn't have much capital in terms of renewable energy. In China's case many emerging power companies still need new equipment to supply China's rapidly growing need for electricity, which means renewable energy type power plants are more likely to numerous in China.
Finally, even the Chinese government is supporting the development of renewable energy by providing "Interest rates as low as 2 percent for bank loans" if regarding renewable energy. Combine all these factors and China's growing need of energy for electricity, and we can clearly see China becoming a leading provider of renewable energy in the world.

Comparative advantage refers to country being able to produce at a lower cost that most other nations. That means that the country has competitive advantage compared to other countries. China has a comparative advantage in the production of renewable energy sources namely wind turbines and solar panels. I think that comparative advantage can be enhanced or created by governmental action. When the government intervenes then the production costs can be lowered through providing subsidies, education, and infrastructure and thus this make s it easier for the companies to perform much better. I think that once China is established as a center for clean energy technology it will be easier for China to retain the status going forward. This is because China is already the world’s number one producer of wind turbines and solar panels and also the government of China has invested in this industry. It is more likely that China will retain the status because of the government support it gets.

China has a high demand for energy. That demand is increasing faster than any other country. China has cheap labor and a large population. The government's perspective is to subsidize and promote development of the energy sector because it is likely to have a big payoff. Cheap labor, increasing demand, and the opportunity to dominate the international market. This is made possible by comparative advantage. This is a win-win for the Chinese government.

Clearly stated, China has the potential for a strong comparative advantage of renewable energy technologies as well as the ability to mass produce the tools to harness renewable energy such as turbines and solar panels.

Government can just as well produce or enhance a comparative advantage. With China growing and investing in various industries, it doesn't overlook renewable sources of energy, "The government spends heavily to upgrade the electricity grid, committing $45 billion in 2009 alone. State-owned banks provide generous financing.". With an already jump started industry, China's government is looking to not just harness the energy but provide more areas with that renewable energy. With the way things are going now, China will not only maintain the comparative advantage over other countries in the short run but long term as well.

Once China has an established renewable energy system they'll be able to produce and perfect the technology and further export these goods to the rest of the world market. Unless there is a huge breakthrough in another country, or China ceases their research and production within the renewable energy sources industry,China will maintain their comparative advantage.

China has a comparative advantage in their technology in renewable energy source. They also are able to create power equipment much faster than any other country. This would give them a comparative advantage because then they could start trading other countries for these products because countries such as the U.S. have not been able to much the speed at which they are coming up with new renewable energy products.
I think that a government can create and enhance a country's comparative advantage. Take China for example it will be enhancing the comparative advantage by giving companies incentives to start using the new power equipment and changing over to more renewable energy technology. Also by investing in the infrastructure and education it helps develop the people of China and the companies there.
If they do establish themselves as such then China will be at a better advantage than other countries with making renewable energy cheaper, better, and faster to produce. The country will then be able to keep its rank as the number one country that produces those products and can then increases its exports by selling them to other countries.

China’s advantage is that China have lower labor cost so that China has lower opportunity cost than other countries to build the green energy system. Government can encourage and cultivate people to join in the green energy industry and have subsidy for the industry in order that the green energy system have more comparative advantage. Moreover, China would gain a big economics of scales because China has huge demand in domestic market because of the big population and market. In addition, as the expensive center has been set up, there is big barrier of entry because of the infrastructure of the green energy center has huge expense so that it makes a big difference with other kind of product in the market.

The theory of comparitve advantage is probably the main component fueling china's domination of the energy industry. Having over a billion citizens, they are able to rely heavily on intense labor and cost savings. As stated in the article the average yearly pay for a worker in the energy plants is $4,100. With the capital being produced, and low wages, more time and funds are allowed for R&D, which I believe is a key factor in China being ahead of more mature countries. It shouldn't be a surprising endeavor being accomplished by China since their demand for enrgy as stated in the article is 9 times that of the U.S. It would be more shocking if they weren't the leader of energy efficient components. Although we can learn many strategies from China's success, reaching their level and differentiation in alternate energy resources, it will be a difficult task to adhere to.

China has a comparative advantage over other countries in renewable energy because they have very low labor costs and a large work force. China has a big population and therefore has a large supply of labor. Building wind turbines is both labor intensive and capital intensive, meaning that both labor and infrastructure is needed to create the turbines. China already has the labor force and is increasing its capital. According to the article, multinational corporations are building big state of the art factories in China, this will ultimately give China a huge advantage over many countries because it will have both labor and capital resources. It is also important to consider government intervention and how they have also increased Chinas comparative advantage. There have been energy policies and creation of energy commission in order for companies to use more renewable energy. China has to produce more energy than the US because it is highly demanded in that country. Since they have such huge demands they have to make sure they produce energy at large scales.

Comparative advantage can't be entirely created by a government but government policies certainly have an influence on comparative advantage. The United States government is attempting to enhance the advantage of renewable resources for example. However there are other factors in China's renewable energy dominance such as the energy market created by China's domestic demand for electricity. China's overwhelming demand promises that this is a sustainable trend in the market and that Chinese industry will have no problem reigning over the renewable energy market.

China's comparative advantage is its ability to produce wind turbines and solar panels at such low costs due to very low interest rates on bank loans, as well as cheap labor. China's large population creates an energy demand far greater than that of the United States, and will need to add 9x as much electricity generation capacity as the US. The Chinese government is helping to increase China's comparative advantage by heavily investing in upgrading the electricity grid, with state-owned banks providing generous funding.
In my opinion, once China has established itself as the world leader in clean energy technology--which it is well on its way to accomplishing--it will have no problem maintaining this position, and there is a chance that the US will switch from its dependence on oil-rich nations, to dependence on China for renewable energy sources. The US and other countries are already behind in the race to make clean energy, and it will be difficult to not only catch up to China, but surpass them in this market.

China's comparative advantage is the cheap labor which is helping china to keep the production cost very low. One of the other advantages that china has is its growing demand for the power which is encouraging the manufacturing of solar panels and wind turbines.China's government has done alot to enhance the comparative advantage by providing bank loans at mere 2% interest rate which is further attracting more and more investors to invest in the future renewable resource of energy.China is basically concentrating on both on using the existing resources i.e electricity grid and innovating the new resources i.e wind and solar energy.Once established as a center for the clean energy technology, it will be very easy for china to maintain its status in the long run as it would provide china with self correction technique. China by using innovative technology would be ahead of most of the countries as it is going first. It would also put barriers of entry to the other countries as baban said which would also need high capital requirements and alot of time for other countries to catch up on china's progress.

China's comparative advantage or "comparative costs" is being able to offer a lower opportunity cost of renewable energy than other nations, therefore china has a comparative advantage in renewable energy technology production. China has the ability to produce solar panels and wind turbines at a low cost because of such low interest rates on bank loans and cheap labor too. I agree with the statements regarding governments being able to enhance comparative advantage but I don't agree with the statement that government can CREATE comparative advantage. China's government is committing $45 billion in 2009 and they have also set mandates for companies using more renewable energy as well as generous subsidies are being produced for solar panel and solar water heaters instillation.

China’s comparative advantage is the production of wind and solar panels at the cost they get it for now. They just started making this technology so they can get cheaper materials through extensive research for these turbines. I am pretty sure buying these materials in bulk definitely makes the price go down. Having the biggest population in the world makes the demand of energy tenfold, making the production of wind & solar turbines crucial for the population. Comparative advantage can be enhanced by the government b/c having a government back up the production of those goods will create a steady flow of products. Society will know more about these turbines and will be educated through information given to kids at a young age, making them more knowledgeable about energy.

China has a comparative advantage to provide more efficient, clean energy sources. They have an advantage is clean energy than other counrties in the world, and they are growing exponentially than others as well. China is able to produce wind turbines, and solar panels because they are able to pay their workers lower wages and give Chinese companies incentives to adopt a more cleanier way of making energy such as taxing them more heavily if they fail to adopt the new forms of energy. It is if they are forcing this change onto there country, they spend more more money than other countries ($45 billion) on creating more capitial for this energy. China is surpassing other countries providing cleaniner forms of energy by making it a main focus. However other countries such as ther United States do not like this idea because of the loss of energy production that they will potentially use in the future. It seems that this is a threat to the United States because if China takes over a majority of the market United States thus will becoming more dependent on the use of China's energy services. But I do think that this might help the United States as well as other countries because even though we are importing solar panels and turbines here in the United States it will alllow us to get energy cheaper and open up jobs for people here in United States to install and maintain they new energy equipment.

In response to question number two, my opinion lies somewhat in the middle of a country being able to create versus enhance its comparative advantage. As clearly stated in the article the government charging fees for renewable energy has generated revenue and helped countries invest in the capital necessary to create these technologies. Other examples include the government investing in infrastructure or education. Having a more educated work force will obviously pave the way for newer technologies to be engineered. There are other factors however that cannot be created by government intervention. For example in the article it states that China has an abundance of cheap labor which helps pave the way for more developments. I think there is a nice balance between how government intervention and factors that naturally occur in a country can help an industry development a comparative advantage. And I think that government intervention is the most important when an industry is in its infancy. After the country gains a foothold in that industry it becomes less important.

China has an advantge over other contries because they understand the chinese market. They focus on creating and developing more efficient renewable energy for the chinese market. China has a huge market need for electricity and this makes them successful. The U.S companies are caught up in the differentiated cost and don't try to take onto the opportunity of creating solar energy technology. A major China advantage over other countries is that it has low labor cost.

China has comparative advantage over other countries in clean energy due to a large amount of labor market with low cost. Although the skill necessary for maintanence and installation of sustainable energy equipment and machinery might be a problem for advancement over other countries. But as the article mentions, China's top leaders are focused in enhanced the energy policy and set forth rules of power generation to use more renewable energy. Fees are also a way that China found of leading companies to use renawable energy, therefore more the market for it to increase even more, besides its large population.
In my opinion the tendency is that China will established itselft as a center for clean energy technology because they are already ahead of the game, and with the already policies and regulations in place, they will just keep improving their technology.

China has a comparative advantage over other countries because their government understands the market. They are able to give company's 2 percent interest for a bank loan. Also, the companies in China are buying new equipment to start so they can buy the clean energy equipment. The other countries like the united states has to replace their already working equipment. I think their advantage will not last though. Companies will take the technology out of China and spread it out to the other countries, China may still be titled "the center for clean energy" but it will be spread out. Other countries will catch up.

The main point of this article was to explain why Europe is in such a huge financial crisis right now. Krugman uses Spains situation as a model to make his point that the lack of fiscal discipline was not the problem for Europe but instead it was the arrogant elites fault that they are here because even with strong reasons against it they still adopted a single currency policy. Yes there are testable hypotheses for the Spain model because Krugman has compared the crisis to that of Germany. Some data he uses is that after Spain experienced their housing boom the price of goods and services rose by 35% between 2000 and 2008 compared to that of Germany which only had a 10% increase. This is appropriate for Krugmans point because the it proves that changing the currency was a poor decision by ht elites and that if the currency had not been changed then Spain would have been able to devaluate by reducing the value of the peseta by 20% against the other European countries but now they can only regain competitiveness by slow deflation. I would consider this column persuasive but if he would have used more data, averages, or any statistical data then i would find it a lot easier to fully believe that the change of currency was the reason for the European financial crisis.

China has is an emerging economy and has had the ability to grow rapidly throughout the years. The large labor force has given China the opportunity to explore several options in becoming an economic power house. The chineese government as well has been an essential part of its economic emergence. As the article illustrates the Chineese government's involvement to control and assist the financial needs of its companies is an essential part of the new found energy. The great amount of energy consumption along with the ability to have a favorible labor force has ofcourse helped the chineese to be the leading power house in the renewable energy. Again, it goes without saying that the Chineese government's involvement in giving faborable rates on bank loans to finance such projects has been greatly beneficial as well.