The Chinese government's stance remains a crucial factor in shaping the scale and impact of the ongoing wave of global solar industry bankruptcies and exits. With China's global solar module market share exceeding 85%, the country wields significant influence over the entire industry, according to insiders in the solar energy supply chain.
Many first-tier Chinese solar module manufacturers receive government support, raising concerns about their potential exit due to financial difficulties. While similar situations have occurred over the past decade, the number of top-tier exits has been relatively limited. However, second- and third-tier manufacturers often face a higher risk of market exit if they cannot sustain their operations.
Industry insiders reveal that the recent wave of bankruptcies and market exits has become a focal point of observation amid rumors of a Chinese government-led market reorganization. Companies with weak financial health and competitiveness may face reduced government support. As a result, the market is closely watching several leading Chinese manufacturers, and estimates suggest that two to three of these manufacturers may face challenges in this bankruptcy wave.
Historically, when Chinese manufacturers faced international trade pressures, the Chinese government often stimulated domestic demand, allowing the supply chain to continue operating without losing sales outlets. This strategy enabled economies of scale, driving down costs.
As a result, the competitive pricing and performance of Chinese products triggered significant global supply chain reshuffles. Regions like Europe, the US, Japan, and even Taiwan were not immune to this impact and continue to struggle. However, in recent years, market outlets for Chinese companies have become increasingly unpredictable for two major reasons.
Firstly, competing for domestic demand has become more challenging, especially in 2024, as many Chinese provinces and cities faced difficulties in integrating solar power into their power grids. This has led to new regulations prohibiting installations, unauthorized development, and grid connection refusals.
In fact, the Chinese central government and various local authorities have issued bans on solar installations. Recent Chinese media reports estimate that approximately 35 regions have explicitly prohibited solar installations, with restrictions imposed in national-level land use areas, including natural parks, forestry and grassland areas, permanent farmlands, first-class protection zones, rivers, lakes, and reservoirs.
Secondly, overseas trade conflicts also persist. In 2024, the expiration of the two-year tariff exemption period for bifacial modules from Vietnam, Thailand, Malaysia, and Cambodia to the US significantly impacted exports to the U.S. This was followed by anti-dumping investigations, causing many Chinese manufacturers' factories in Southeast Asia to temporarily shut down pending the investigation outcomes.
Industry insiders believe that inflation has impacted global consumer purchasing power, and high interest rates have dampened the demand for renewable energy. In some countries, high deposit interest rates offer better returns on investment compared to generating electricity, leading to capital displacement and a slowdown in demand.
Despite the significant industry shakeup, industry insiders believe that China's resilient solar energy supply chain, characterized by a strong cluster effect and self-sufficiency in key equipment and materials, will enable Chinese manufacturers to rapidly regain market dominance once demand rebounds.
