China solar industry faces crisis amid oversupply and price drops

China's solar panel industry is facing a severe survival crisis driven by massive oversupply and intense price competition. Manufacturers are struggling with consecutive years of losses as product prices have dropped by approximately half compared to levels seen before the recent production boom.

According to the China Photovoltaic Industry Association (CPIA), solar panel output from January to June fell by 35% year-on-year to 201 gigawatts (GW), marking the first decline since the association's founding in 2014. This downturn follows a period of rapid expansion that began around 2022, triggered by rising energy prices following the Russia-Ukraine conflict.

While the Chinese Ministry of Industry and Information Technology has attempted to curb excessive price competition by meeting with major manufacturers to discuss reducing production capacity, many companies remain hesitant to cut output for fear of losing market share. Liu Yiyang, Deputy Executive Secretary of the CPIA, suggested the recent production drop may signal an upcoming market reversal. However, BloombergNEF analyst Youru Tan noted that the decline might stem from shrinking demand for new solar installations within China rather than policy interventions.