Economic analysis on China's industry development policy of new energy

In order to encourage the development of new energy industry, Chinese government has carried out some policies, such as fiscal subsides, tax incentive, and compulsory quota control etc. This paper makes an economic analysis and a comparison of these policies to see their efficiency according to the fundamentals of economy. And results show that as incentive policies to reduce the price new energy, government subsidy and preferential taxation are both effective with similar effect; compulsory quota control aiming at solving net integration problem causes some welfare lost in short terms but improves in the long run; while fixed-price purchase loses most welfare because the price does not fall with enlarging market and should be used for the purchase of excessive output only.