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

Over the past 15 years, China has come to dominate the global market for solar energy.

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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.

But China’s solar panel domestic industry is in upheaval. Wholesale prices plummeted by almost half in 2023 and have fallen another 25 per cent in 2024. Chinese manufacturers are competing for customers by cutting prices far below their costs, and still keep building more factories.

The price slashing has taken a severe toll on China’s solar companies. Stock prices of its five biggest makers of panels and other equipment have halved in the past 12 months.

Since late June, at least seven large Chinese manufacturers have warned that they will announce heavy losses for the first half of 2024.

The turmoil in the solar energy sector amid enormous factory capacity and booming exports highlights how China’s industrial policymaking works.

The government decided 15 years ago to put extensive support behind solar power, and then let the companies claw it out. Beijing has shown a high tolerance for letting firms stumble and even fail in large numbers.

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.

China’s Communist Party leadership called on July 21 for further investment in high-tech industries, including solar power.