Collective innovation and shared industrial capacity will underpin the region's clean energy transition
When leaders of the Asia-Pacific Economic Cooperation members gather in Shenzhen this week, the city in South China's Guangdong province will offer more than a showcase of China's technological progress. It will illustrate a shift in the foundations of the energy economy: the growing importance of industrial capacity in determining who can produce, deploy and benefit from clean energy.
The implications extend across the Asia-Pacific. APEC's 21 member economies account for around 60 percent of global GDP and nearly half of world trade. Their choices on clean energy cooperation will shape both the region's transition and the affordability of decarbonization worldwide.
For much of the fossil fuel era, energy wealth rested heavily on geology. Access to oil, gas and coal helped determine economic strength and strategic influence. Natural endowments still matter in the emerging energy economy, from critical minerals to abundant solar and wind resources. But resources alone do not deliver affordable clean power.
Solar panels, wind turbines and batteries are manufactured products. Their competitiveness depends on engineering knowledge, production efficiency, supplier networks and the capacity to improve performance while reducing costs. The center of gravity in energy competition is therefore shifting toward what economies can make.
Shenzhen exemplifies this transformation. Its strengths also form part of a wider Chinese industrial ecosystem built through decades of investment, experimentation and learning in manufacturing. Capabilities developed in electronics, chemicals, machinery and advanced materials have converged with specialized supplier networks and a vast domestic market to accelerate clean energy innovation.
These capabilities accumulate through repeated interaction among researchers, engineers, suppliers and customers. Announcing a factory or subsidizing its construction can expand production capacity. Developing the knowledge and networks that make it competitive takes longer.
For the Asia-Pacific, the core question is how this accumulated capability can support a broader regional transition while reducing the vulnerabilities associated with concentrated supply chains.
The history of solar power offers a useful starting point. Panels installed on Australian rooftops embody an international exchange of knowledge that a country-of-origin label can only partly capture. Through the University of New South Wales' Torch Innovation Precinct — the only precinct of its kind outside China, established in 2016 with China's Ministry of Science and Technology — researchers have worked with Chinese manufacturers including LONGi, AIKO and CHINT to translate these technologies from the lab into mass production. Over the past decade, the precinct has attracted some A$140 million ($95.1 million) in research contracts and completed more than 290 projects involving more than 140 businesses from Australia, China and other countries spanning clean energy, water treatment, environmental technology and advanced materials.
Australian research, Chinese manufacturing and Australian deployment were connected and ultimately benefited by such channels that allow knowledge, investment and practical experience to advance innovation in green technologies.
This history reveals a more complex relationship than a simple exchange between an exporter and an importer. Australian research contributed to commercial technologies; Chinese industry helped turn those technologies into affordable products at scale. Manufacturing experience, customer feedback and intense competition then drove further improvements of both technology and production processes.
The resulting gains in affordability have made solar power accessible to far more households and businesses. Scientific discovery and manufacturing innovation each contributed to that outcome. A productive regional partnership should recognize and reward both. Yet successful collaboration in technology does not automatically produce smooth cooperation across markets.
Consider a supply chain in which Chinese solar cells are assembled into modules in Southeast Asia and supplied to Australia. Relocating production is only one part of the process. Production records, testing, certification and warranties must also meet the destination market's requirements.
Australia's arrangements illustrate the importance of these details. Solar modules must meet applicable standards and listing conditions to qualify under its Small-scale Renewable Energy Scheme. Changes in manufacturing arrangements can affect whether products remain within the scope of their certification.
These safeguards protect consumers and help maintain confidence in the transition. The challenge is to make compliance predictable and verifiable across borders. Manufacturers need sufficient notice of changes in testing requirements and implementation schedules to adjust production and inventory. Clear documentation and coordination between certification bodies can reduce unnecessary delays while preserving rigorous standards.
Cooperation must also respond to what participating economies want from clean energy investment. Australian governments and communities increasingly expect projects to create local jobs, develop skills and strengthen domestic industry. Similar aspirations exist throughout Southeast Asia.
These expectations are reasonable. Their fulfillment depends on sustained investment in people, suppliers and institutions, alongside investment in equipment. A factory can create employment, but its wider contribution depends on whether local workers acquire transferable skills, domestic companies become capable suppliers and research organizations gain opportunities to solve practical industrial problems.
Security concerns also deserve careful attention. Concentrated supply can expose economies to disruption, and some materials and technologies have sensitive applications. Effective safeguards require a precise assessment of these risks, including where civilian and military uses overlap. Applying sweeping restrictions across the clean energy trade can raise costs and slow deployment without necessarily resolving the underlying vulnerabilities.
A stronger regional approach would combine wider participation in production with cooperation on standards, testing, training and research. It would give each participating economy a credible route toward activities of greater technological and economic value.
China's contribution could extend further into helping partners develop productive capability through joint research, supplier development and technical training. Australia could connect its research expertise and mineral resources more closely with regional manufacturing, while strengthening the workforce needed for its own transition.
Southeast Asian economies should help shape these partnerships around their development priorities. Their role can grow through engineering, component production, technical services and testing and certification facilities that serve regional markets. Each economy will bring different strengths, and those strengths will change as experience accumulates.
APEC can help translate these ambitions into practical cooperation. Shared training programs, closer coordination on product standards and transparent certification procedures would make it easier for companies of different sizes to participate. These measures would also help turn individual investments into lasting industrial relationships.
The Shenzhen meeting offers an opportunity to advance this agenda. As energy becomes increasingly dependent on manufacturing, the ability to learn and innovate together will become a greater source of regional prosperity.
Geological endowments are largely fixed. Industrial capabilities can grow through investment, learning and exchange. The Asia-Pacific's green future will depend on how widely its economies share in that growth.
The author is an academic and a commentator on China's technological innovation at the Australia-China Relations Institute at the University of Technology Sydney.
The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.
Contact the editor at editor@chinawatch.cn.
