The paper compares the wind energy development in China and India in order to understand how policy environment and innovation strategy influence two different development paths in these two countries.

Both China and India started to develop wind energy in the middle of 1980s under the help of Danish government. After more than 20 years development, China and India ranked 1^st and 5^th respectively in the world in terms of cumulative installed capacity. Moreover, both countries have global top 10 manufacturers, saying Goldwind, United Power and Mingyang in China, and Suzlon in India that have potential to compete with Danish Giant Vastas in global market.

This paper addresses the question of how China and India wind energy developed by dividing their development process into four stages: pre-commercial stage, early-commercial stage, fast growth stage and steady growth stage based on Roger’s innovation diffusion theory. It finds that in each stage, India develops earlier while China grows faster in terms of domestic installation. Both two countries are able to manufacture quickly after they acquire technology while China has a better performance on innovation activities evidenced by patent and publication numbers. In contrast, India exports earlier and exports more quantity of wind turbines in past 10 years while China is expected to make a mark in the future with substantial production capacity and price bargain.

After a brief comparison of China and India wind energy development in terms of domestic market, innovation and export activities, the paper reviews the respective policy environment and innovation strategy the government use and analyzes how these policy and strategy have influenced the development of wind energy in each national context. It founds that policy is the key driver in developing local market. The domestic market, but not exports, is critical to manufacturing industry in both countries. While India relies on financial incentives to develop domestic market, China uses comprehensive policy tools and proved more successful in conquering domestic market, as well as stimulates innovation. However, policy may act both as contributor and barrier, as shown by China localization policy’s consequence on local market and export, we need a more careful utilization of policy tools.