Stung by the impact of the financial crisis, the hilly city of Yunfu in China’s southern Guangdong province decided in 2009 it was time for a makeover. Known over hundreds of years for producing delicate stones for arts and crafts, the city had few modern industries apart from consumer appliances. So officials decided to lop the top off the surrounding hills and build a 13.4 sq km industrial park focused on fuel cells — a rival technology to internal combustion engines and electric batteries.
Attracted by generous government subsidies, a whole suite of companies covering the supply chain have now set up in the park, which is producing hundreds of buses and small trucks using fuel cells that run on hydrogen gas. So successful has it been that local officials now plan to flatten two more hills to create a neighboring vehicle manufacturing plant and a chemicals facility.
“When we moved here it was all barren hills,” says Frank Ma, chairman of Guangdong Nation Synergy Hydrogen Power Technology, walking along a line of bright blue fuel cell buses. “Your first impression [of the area] is that this is not the kind of place to do this kind of manufacturing. [But] this is a special kind of industry in China.”
The Yunfu park is the epitome of China’s powerful industrial policy — which is designed to use generous subsidies to develop and dominate emerging industries critical to the “Made in China 2025” shift to high-end manufacturing. Beijing has spent an estimated $58.8bn subsidizing its electric car industry over the past decade, according to the US-based Center for Strategic and International Studies, creating the world’s largest market for electric cars as well as a dominant position in batteries— surpassing Japan and South Korea. Subsidies have also helped propel Chinese solar makers into the ranks of the world’s largest producers, overtaking competitors in the US and Europe.