Both the government officials and investors in China are celebrating a piece of “green” news lately. According to a recent report from the Pew Research Center, China’s $30 billion investment in cleantech in 2009 is greater than that of any other country, with total global investments reaching $160 billion. The Ernst & Young report and the SSG Capital report also show that China invested $10 billion in wind in Q2 of 2010 alone, which represents half of the total of global investments. The report also shows that the venture capital invested in cleantech in China reached $5.7 billion for the first nine months of 2010.

Why is China so keen on new energy? There is no denying that there is tremendous pressure on the Chinese government to respond to the severe environmental challenges the country faces. Additionally, China’s top minds worry about the needed energy solution to support China’s growth for the long term. The lack of an abundant, reliable energy source continues to be among the top challenges to China’s strategy to continue its economic “miracle.”

Lastly and equally important is China’s future economic strategy. China wants to get itself out of its current economic reliance upon low-margin manufacturing and to be a leader in the next economic wave, of which cleantech will be a major component. In this regard, cleantech is a must do!

Another positive piece of news last week in China concerned advances in a key technology to raise the availability of uranium by 60 times, expanding current identified uranium resources in the world to provide adequate fuel supply for existing applications for the next 3,000 years.

Research and development of the cleantech industry in China requires strong support and backing from the government. The centralized power of China’s government, the liquidity of its markets and the talent and innovation emerging in China are an ideal mix, which has helped the country gain an early entrance in this industry.

A strong institutional power, like the Chinese government, can effectively drive major developments like cleantech. This is where Barron has focused its attention.

Our focus on China for our cleantech investments stems from our alignment with the government’s stated cleantech agenda. The TD-SCDMA 3G and local high-speed rail stories are proof that the Chinese government spares no effort in carrying out its cleantech agenda and is willing to take risks to support those areas that could help the country’s domestic corporations re-engineer the global environmental and energy standards. Typically, important core technologies are usually developed by the large, government-owned businesses in China. However, there are generally many opportunities for smaller companies to be suppliers to these companies or to be successful themselves in such areas. These smaller companies include success stories such as HuaWei, ZTE, North Vehicle and China High Speed Gear, which turned out to be good investments for many.