China is warning its oversaturated photovoltaic sector to avoid blindly expanding capacity – including in producing solar panels – with newly issued guidance that comes as industrial overcapacity has been self-defeating domestically while triggering backlash in the global market and stoking geopolitical tensions.
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After months of soliciting public opinions, the Ministry of Industry and Information Technology (MIIT) released revised versions of two major industry-guiding documents for the photovoltaic sector on Wednesday, urging manufacturers – but not ordering them – to reduce projects that are merely meant to increase capacity.
The ministry also raised the minimum capital required for the new construction and expansion of solar-manufacturing projects to 30 per cent, up from 20 per cent. The move is meant to ensure that such projects are financially viable and sustainable while adding value to an already competitive industry.
Solar producers are also encouraged to strengthen technological innovation, improve product quality and reduce production costs, according to the documents.
This sends a signal to companies to avoid purely pursuing scale, and to expand production cautiously
Analysts say the new guidance should help eliminate backward capacity while promoting the healthy development of the sector.
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And while the guidance is not mandatory, firms that meet the outlined criteria are likely to benefit from greater policy support, said Jiang Hua, deputy secretary general of the China Photovoltaic Industry Association (CPIA).