[Activity Review] Global Game in the Green Trend: Decoding Policies in the New Energy Industry and the Future of International Trade | AMF

Release time：2025-08-07    

On Sunday afternoon of August 3^rd 2025, the academic public course held by Advanced Master of Finance of Fudan University was successfully conducted. The course invited the honorable Yi Xu, Distinguished Professor in Economics at FISF and Professor in Economics at Duke University, who gave an in-depth analysis on the global new energy development, industrial policies and international trade pattern.

The core academic achievement of this lecture originates from a key research invitation of World Trade Organization, which focuses on renewable energy economics and policies represented by the solar energy and wind energy, systematically combed the theoretical foundation of the industrial policies and reviews the latest empirical research. It also explores how renewable energy related policies generate a spillover effect among enterprises and countries, and how this new research evidence enlightens the current global industrial policy debates and policy-making.

Working Paper ："The Role of Industrial Policy in the Renewable Energy Sector", July 2025

Historical context: finding new consensus in the old system

At the very beginning, the public course clarified a severe reality: the multilateral trade system represented by WTO is facing tremendous challenges right now. The prevailing trade wars and unilateralism have almost disintegrated the Washington Consensus of “Free Trade First” in the past. However, countries worldwide (whether developed countries or developing ones) are implementing their respective industrial policies with unprecedented intensity. In this context, there is an urgent need for international organizations like WTO to reposition and reckon how to include “non-compliant” industrial policies into a brand-new international trade framework that can promote cooperation.

Breaking point: why green energy?

Why is green energy (especially the solar energy and wind energy) chosen among all the industries to be the best starting point for future cooperation? The key is its unique positive externality.

• Common interests beyond national borders: Unlike “zero-sum game” industries like iron and steel, a country’s progress in green energy technology can bring common environmental benefits for the whole world by decelerating global warming. Such “public benefits” create a solid consensus foundation for the policy coordination and negotiation among countries.

• Astonishing cost reduction trend: over the past decade, the cost of solar photovoltaic and wind energy has achieved exponential decline, China’s cost control being particularly prominent. This proves the great potentials of industrial development and technology iteration and higher economic feasibility of green energy transformation.

Tripartite game:

what are the differences of the “tool box” of the industrial policies in China, America and Europe?

The public course comprehensively compared the industrial policy practices in the three major economies around the world to reveal their respective strategic focus:

• The European mode: subsidizing the consumer end. European countries led by German mainly adopted the “Feed-in Tariff” in the early stage, directly subsidizing green power users, for the purpose of pushing forward energy structure transformation. Though greatly stimulating market demands, it has also indirectly guided many subsidies to Chinese manufacturers with more cost advantages.

• The American mode: tax credits and local leadership. The US tends to subsidize the consumption end (installers) via “investment tax credits.” The willingness and amount of investment at the federal level have long been lower than in Europe, and policies are more driven by states and localities.

• The Chinese mode: focusing on the production end. China focuses more on subsidizing manufacturing enterprises, including land provision, low interest loans and direct financial support, aiming to rapidly build a production advantage of scale and full industry chain, and to ultimately gain strong competitiveness in the global market by cutting down costs through “learning by doing” and the “agglomeration effect.”

Behind policies: the economic logic of government intervention

Traditional economic theories often maintain a reserved attitude towards government intervention, but the lecture presented that industrial policies are equipped with adequate theoretical support in the new energy field:

• Externality: correcting the environmental benefits that the market cannot reflect

• Knowledge spillover and learning-by-doing: government subsidies can help emerging industries overcome the tremendous costs in the initial stage, and rapidly advance technology maturity and cost reduction through experience accumulation from mass production.

• Agglomeration effect of the industry: supports for the production end can form a strong industrial chain cluster by attracting talents, optimizing the supply chain and broaden knowledge sharing, constructing an overall advantage difficult to surpass. 

Conclusion and prospect

Professor Xu concluded that industrial policies had been common practices globally. In the future, international trade negotiations will focus on not only tariffs but also the coordination among policies in various countries concerning subsidies and investments.

Thanks to its positive effect globally, the new energy industry provides an ideal “testing ground” for exploring new international cooperation modes. Despite the ongoing trade conflicts, seeking cooperation based on understanding the logic behind the policies in different parties and acknowledging China’s positive role in cutting down the global energy cost is the inevitable course leading to global sustainable development. The experience of Chinese enterprises in handling trade barriers in the past decade also provides precious reference for us to figure out how to lay out in the new globalized pattern.

The Advanced Master of Finance [PT+] of Fudan University is committed to building a high-end dialogue platform with profound industry-university-research integration. Through academic public courses, the program keeps inviting renowned professors and industry mentors to give keynote sharing on frontier topics, to enhance cross-domain exchanges in the academia and industry and advocate lifelong learning. This not only demonstrates AMF’s school-running philosophy of close combination of theories and practices, but also sets up a vast stage for the exchange and growth of both the academia and industry.

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In 2024, Fudan University officially launched the Advanced Master of Finance, aiming to cultivate a group of high-level application-oriented professional talents who have grasped solid fundamental theories and systematic expertise in pan-finance areas while also possessing strong practical abilities and good professionalism to better serve the strategic construction of Shanghai International Financial Center. The “part-time master’s of finance program” is for graduates with four years or more of work experience and enrolls by separate examinations. It has set abundant scholarships for freshmen and current students.