China rules solar energy, but its industry at home is in trouble

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It chooses industries to dominate, floods them with loans and lets companies fight it out.

CHANGSHA, China – Over the past 15 years, China has come to dominate the global market for solar energy. Nearly every solar panel on the planet is made by a Chinese company. Even the equipment to manufacture solar panels is made almost entirely in China. The country’s solar panel exports, measured by how much power they can produce, jumped another 10 per cent in May over 2023.Wholesale prices plummeted by almost half in 2023 and have fallen another 25 per cent in 2024.

Beijing’s spare-no-expense policies are in particular focus as China doubles down on factory exports to compensate for a slowing domestic economy – drawing criticism from the United States, the European Union and other trading partners who contend that China’s heavy support of its industries is unfair.

Started in 2008, the solar panel manufacturer benefited early on from practically every possible subsidy. It got 22 acres of prime downtown land in the heart of the city almost for free. One of China’s biggest state-owned banks arranged a loan at a low interest rate. The Hunan provincial government then agreed to pay most of the interest.

China’s banks, acting at Beijing’s direction, have lent so much money to the sector for factory construction that the country’s solar factory capacity is roughly double the entire world’s demand. “Enterprises continue to put advanced production capacity into operation to maintain competitiveness” said China’s National Energy Administration director Zhang Jianhua at a news conference in June. “At the same time, the outdated production capacity is still extensive and needs to be gradually phased out.”

The West is raising barriers to China’s solar panels. Europe has begun barring their use in government procurement projects unless Chinese companies disclose their subsidies, which they refuse to do.

 

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