China’s solar photovoltaic (PV) industry has been making losses of a scale rare in its history.
“The current losses are losses for the entire industry chain. I have never encountered it before,” Wang Bohua, honorary chair of the China Photovoltaic Industry Association, told a conference last week, as reported by Caixin.
Wang said most companies in the main PV manufacturing chain posted net losses in the first half of this year, and losses in the second quarter were heavier than in the first.
The main PV manufacturing chain includes four links: silicon materials, wafers, cells, and modules. In the first half of 2024, domestic polysilicon and wafer prices slumped by more than 40%, and cell and module prices slumped by more than 15%, reported the Economic Observer. The output value of domestic PV manufacturing, and the total export value of PV products, declined by 36.5% and 35.4% respectively year-on-year.
The 22 “A-share” PV companies – meaning those that trade in Chinese yuan on Chinese stock exchanges such as Shenzhen’s and Shanghai’s – made a combined loss of more than CNY 15 billion (more than USD 2 billion), according to data released earlier in July by 21st Century Business Herald.
Gantanhao Technology, a WeChat-based analyst of the carbon transition, quoted industry insiders on what has contributed to the supply-and-demand imbalance. Their reasons included local government unwillingness to eliminate production capacity, weak intellectual property protection, and trade barriers to overseas markets.
Wang Bohua suggested that “local governments need to strictly control unreasonable bailout behaviours” and let the market eliminate outmoded production capacity.
At a 30 July meeting of the Politburo, China’s top leaders proposed to “unblock the exit channels for outmoded and inefficient production capacity.”
The rebalancing of supply and demand of the PV industry may have to wait until next year, when the pressure on enterprises may be reduced, according to analysis in financial magazine Caijing,
Researcher Liang Yongmei offered some historical analysis. China has experienced four rounds of overcapacity in the past 40 years despite the government’s active response, and the issue still recurs cyclically, Liang wrote.
Read Dialogue Earth’s 2018 analysis on China’s PV industry, and an interview during the last phase of overcapacity in 2012.