For Eco-Entrepreneurs in China, No Simple Way to Grow a Business

Zhong Jialun owns a fuel cell company in suburban Beijing.
Zhong Jialun owns a fuel cell company in suburban Beijing. "I agree with the government," he says. "We must have our own innovative technology." (From Zhong Jialun)
By Edward Cody
Washington Post Foreign Service
Thursday, December 28, 2006

SHANGHAI -- Except for its paint job, green to symbolize environmental friendliness, the bus looked ordinary enough as it bumped along a suburban Shanghai street late one recent morning. But it was strangely quiet. Only a distant hum accompanied the rattles and passengers' conversations.

The hum came from a hydrogen fuel cell providing clean, renewable energy to the demonstration vehicle, manufactured by Shen-Li High Tech Co. Ltd., a private Shanghai company that set out to make its fortune from hydrogen power for buses, taxis and generators in the giant Chinese market.

Shen-Li, launched here by a Clemson University-trained engineer, Hu Liqing, found encouragement in a campaign by the Chinese Communist Party to promote bold departures such as hydrogen power.

Party leaders have decided that the Chinese people, steeped in tradition and educated to obey party directives, must learn to initiate and innovate, because the future of the Chinese economy depends on it.

Most of China's current economic boom has come from young men and women working for low wages in factories that use technology and product designs from abroad. As the economy matures, China's government has warned, it must rely increasingly on new technology invented by the Chinese themselves, who are being urged to turn assembly plants into laboratories blooming with a hundred flowers of new ideas.

"We must speed up the construction of an innovative nation," the Communist Party's Central Committee declared after a Dec. 5-7 meeting.

But the experiences of Shen-Li and other companies with ambitions to market hydrogen power suggest that China's one-party system and pervasive controls hamper innovation in many fields, from arts to sciences. In a nation where the party retains a monopoly on power -- economic and otherwise -- bursting from the official mold with a new idea and bringing it to market is never easy.

Although the need for pollution-free vehicles and renewable energy is clear in China's increasingly choked cities, the future of hydrogen power has remained in the grasp of a powerful officialdom that decides on budget allocations. The government's senior levels repeatedly have endorsed alternative forms of energy but have yet to take decisive steps toward getting hydrogen-powered vehicles onto the streets.

The Shanghai municipal government and party apparatus, proud of a can-do attitude that helped make their city China's most prosperous, promised big-time investment in a hydrogen-powered bus and taxi fleet. But the local leadership went down in a corruption scandal in September, raising doubts about their plans.

"In China, it all depends on the government," said Mao Zongqiang, one of the country's leading experts on hydrogen and other alternative fuels at Tsinghua University's Nuclear and New Energy Institute.

Hu Liqing, 43, made hydrogen power his mission years ago, even before the Communist Party struck up its innovation theme. After postdoctoral studies at Clemson and two years working in Vancouver, B.C., he returned and founded Shen-Li in 1998 with the idea of attacking the pollution in his native China and making money as well.

"We are trying to do something good for human beings," he said in an interview at his factory in Shanghai's suburban Longyang Industrial Garden. "Even in Canada, we are losing paradise. Of course, Chinese people face an even more serious situation, and so that's why I came back and tried to get people to focus on the future."

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