The Chinese government has made public plans to overhaul their solar panel industry. The government plans to achieve this by cutting back on their support, encouraging merging of solar panel producers, ensuring that local leaders are “blocked” from “supporting domestic producers” and even going as far as allowing some producers to go bankrupt.
This overhaul becomes necessary in order to make the industry, which has been on a backward slide recently, much stronger. There have been large losses incurred due to competition that resulted in large price-cuts and excessive production. The overhaul is also aimed to allay fears in Europe and the US regarding the violation of trade rules by the Chinese government.
Though the government’s official statement on the announcement didn’t give any specific details, it did indicate that it was vital to develop solar power as it is one of the “strategic emerging industries”.
According to the AP, losses in the solar industry have reached millions of dollars this past year as due to reduced prices and sluggish sales since the global financial crisis.
Maxim Group, the New York financial firm, put the amount of debt at about $17.5 billion in its 2012 report.
Meanwhile, Europe, the US and India are investigating what they term as unfair subsidies by the Chinese government for their solar industry. Despite denying this, it is unlikely that the Chinese would be able to convince the investigators from Europe, the US and India. So, it comes as no surprise that the government is instigating this move in reducing support for their solar industry.