Over the past decade, China has built up its cleantech sector with dizzying speed and scale. The country is now the world's factory for silicon solar PV and has become a dominant force in wind manufacturing. It has also become a vibrant end market for wind, solar thermal and now solar PV.

During the same time period, after China adopted more liberal financial policies, investment activity has rocketed -- both from international investors and Chinese players stepping onto the global stage. China's foreign direct investments (FDI), which were less than $3 billion in 2002, soared beyond $90 billion in 2013, making China the third-largest source of outward FDI. Chinese FDI into the U.S. now exceeds U.S. companies' FDI into China.

China's investment outreach has been particularly strong in cleantech. It is now one of the top global investors in overseas renewable energy, with hundreds of commitments to wind and solar in dozens of countries. Only half of those transactions are visible enough to calculate, but they represent nearly $40 billion in cumulative value and more than 6 gigawatts of capacity.

From 2002-2012, Chinese venture capital deal values grew at 33 percent annually, topping $7.3 billion in 2012. That's roughly one-quarter the size of U.S. total investments, but cleantech VC investments between the two countries were roughly the same. In 2014, U.S. cleantech startups are as likely to solicit interest from Chinese investors as they are from U.S. investors.

With policy being driven by macroeconomic development, resource insecurity and environmental concerns, cleantech promises to be a hot growth market for investment for years to come. So who are these Chinese cleantech investors and what's motivating them?

A new report from Azure International takes a closer look at what's driving Chinese cleantech investment, both domestically and internationally. Here are some of the highlights, with some surprising findings.

Chinese investors are more discerning and strategic

Contrary to their typical portrayal in Western media, Chinese investors are becoming increasingly sophisticated.

"Some of the larger Chinese companies looking for acquisitions or investments aren't just looking to pick up attractive prices and assets," said Anders Hove, manager of Azure's cleantech advisory practice. "They're looking for good technology matches, complementary strategies and know-how. And they're driving a hard bargain."

They're also becoming patient, looking beyond cheap deals and splashy technology to seek intangible value. ROI is important, but it's not the sole factor driving their investment decisions.

The playing field is increasingly diverse

Most of China's outbound investments have been executed via state-owned entities, but private firms are increasingly active in investing overseas, especially in cleantech areas where they are increasingly in the spotlight.

Ongoing efforts by Wanxiang (battery technology and electric vehicles) and Hanergy (thin-film solar PV) to absorb and develop their respective portfolios are being closely watched -- especially domestically by others who might follow in their footsteps.

"There is a strong public awareness of the brash private companies making strings of acquisitions in cleantech areas," Hove said. "There's a certain star power in some of [their] strategies."

Government support is still key for these companies. "For Chinese private firms, outbound investing is often enabled by strong support from public sector financing" such as the China Development Bank, said Sophie Lu, business development consultant at Azure.

They're active at the edges of cleantech

Cleantech interest and investments are broadening beyond wind and solar. Favorite targets for Chinese investors include LEDs, building energy management, smart grid and energy storage -- areas that can achieve results for a lot less cost than new solar or wind farms.

Another intriguing area of potential Chinese outbound investment is microgrids targeting developing countries. China knows a thing or two about managing heavy electricity consumption and renewable energy generation across a sometimes-creaky interconnected grid, said Hove. Cross-border investment could flow both ways here: Chinese companies could help developing countries to address reliability and interconnection; meanwhile, they could seek out advanced forecasting and control technologies to help China's own grid and renewable energy sector, particularly if China’s grid opens to foreign investment.

They're benefiting from financial reforms

System-wide financial reforms are opening the doors for Chinese investors, including private equity and venture capital, to go out and invest in global markets.

Domestic cleantech investing is changing too, thanks to a push for distributed generation and smart grid sectors. These reforms also are birthing new project financing mechanisms -- a category Azure describes as "Yuan 2.0" -- that will widen the field of players to invest both overseas and in cleantech. New corporate investors are likely to come from sectors not normally viewed as in cleantech, seeking to "move up the value chain to more efficient or higher-end product lines," the researchers noted.

Even crowdfunding for cleantech in China is emerging, though differently than in the U.S. Instead of massing interest via Kickstarter or Indiegogo, China's first solar crowdfunding effort involves state-owned enterprise with contributions from select high-profile individuals.

Policy still supports cleantech, but with limitations

Support for China's cleantech sector is still strong as the central government develops aggressive renewables targets and continues handing out subsidies.

Distributed solar is still a top priority, but the distributed solar target for 2014 is "quite far away" from where it needs to be to hit China's stated targets, Hove pointed out. Some are speculating that updated policies might be coming this summer to update those targets. Note that "distributed" solar has a different meaning in China. The cutoff for a "distributed" energy project in China is 6 megawatts, much larger than the typical U.S. residential rooftop system that is considered distributed.

However, there are limits to Beijing's influence when its desires clash with the needs and desires of local authorities. Provincial and city governments are very reluctant to see their "champion" companies that they've supported for several years be acquired by champions from a competing government or city and watch those those subsidies and tax breaks flow to another region, Lu pointed out. Energy development essentially becomes a turf war: "Nothing is more critical to government finance and industrial development in China than the right to allocate land resources," said Lu.

That policy friction between central and local governments is partly why China's wind and solar industries still haven't seen sweeping consolidation as expected. Industry consolidation in the U.S. typically means companies go bankrupt, or their assets are sold off and plucked by stronger players. "That's not what has been happening so far in China," Hove said. Strong and weak players are emerging over time, but the Chinese solar and wind industries are not trending toward consolidation.