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Over the past decade, driven by strong international demand and supportive policies from local governments, the photovoltaic (PV) industry was positioned as a key pillar of China’s advanced manufacturing and emerging energy sector, leading to rapid growth. However, this outward-oriented model created significant risks for companies. Since the global financial crisis, especially after the European debt crisis, EU countries have cut subsidies for solar energy, reducing overall demand. Meanwhile, Europe and the United States have imposed higher tariffs on Chinese solar panels to protect domestic jobs, further weakening the competitiveness of Chinese PV firms.
One major lesson learned is that Chinese companies failed to adapt quickly to changes in the international market. When global demand dropped, many still pursued high output, leading to overproduction, especially in raw materials like polysilicon. This resulted in inventory buildup and forced companies into price wars, which severely cut profit margins. At the same time, the development of the domestic raw material and high-end markets lagged behind, with critical components still heavily reliant on imports. This imbalance in the supply chain, with rapid growth in low-end sectors and slow progress in high-end ones, disrupted trade balances and worsened corporate financial health, leading to heavy debts.
The PV industry was once heavily influenced by national policies, playing a vital role in the local economy. To maintain employment and economic stability, some local governments used tax revenues to help companies manage debt. While this delayed layoffs and bankruptcies, it also led to accumulating debt. Moving away from government dependence and seeking new capital through market-driven approaches became a tough but necessary choice for struggling firms. Companies must also focus on product upgrades and expand into downstream sectors like power station construction to maintain competitiveness.
The bankruptcy of Wuxi Suntech initiated a consolidation process in the Chinese PV industry, helping to reduce overcapacity, but it is not enough to fully rebalance the entire sector. In the current climate of declining demand and falling prices, the industry is divided: companies like Wuxi Suntech face high debt burdens, while others remain financially healthier, operating on a low-cost, low-profit model, ready to capture market share from larger bankrupt firms.
Whether through mergers or forced reorganization, the healthy development of the PV industry depends on a stronger market mechanism. With the official implementation of China’s “Distributed Power Grid-Connected Services†policy in March, the stage was set for domestic PV applications. According to the 12th Five-Year Plan for Energy Development, China aimed to reach 10 million kilowatts of distributed solar power by 2015, offering a new opportunity for the industry to shift from export-oriented to domestic-focused growth. Expanding domestic demand and building a competitive edge in distributed energy will be crucial for future survival.
In addition, to overcome unfair trade barriers abroad, China must adopt a dual strategy—stabilizing its domestic market while expanding into emerging regions such as the Asia-Pacific. According to the China Photovoltaic Industry Alliance, the share of the Asia-Pacific PV market in global demand is expected to rise from 11% in 2010 to 26% by 2015.
Despite the challenges, many believe that the future of China’s photovoltaic industry remains promising. With proper reforms, market adjustments, and strategic shifts, the sector can recover and continue to grow in the long term.
Photovoltaic industry
Abstract Wuxi Suntech was the first large-scale solar energy company in China to declare bankruptcy. This event has prompted local governments and business leaders to realize that in a fiercely competitive market, cheap credit and government support are no longer sufficient to ensure long-term survival for companies. The process of entering bankruptcy is complex and challenging, and the industry hopes to see enterprises be restructured or revitalized under a more mature market mechanism and improved business strategies.