Bankruptcy of Suntech signifies the downturn of the Chinese Photovoltaic (PV) Solar Industry

By | March 24, 2013

Bankruptcy of Suntech signifies the downturn of the Chinese Photovoltaic (PV) Solar Industry

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On 18th Mar 2013, bank creditor of the Suntech Power Co., jointly submitted the Suntech bankruptcy reorganization application to the Wuxi Intermediate People’s Court. After judicial review Suntech was found to be unable to repay the maturing debts. The Wuxi Intermediate People’s Court on March 20 formally approved the implementation of the bankruptcy reorganization of Suntech according to the relevant provisions of the Bankruptcy Law.

Background:

Affected by the “countervailing and anti-dumping” actions from European countries and the United States as well as the serious excess capacity of domestic industry, China’s Photovoltaic (PV) Solar Industry has entered into a dilemma that cannot be removed easily by the market along. On one hand, China’s solar photovoltaic industry generates the largest production capacity the world but the sale of more than 90% of the products is relying on the exports resulting in the vulnerability of the industry to the external changes; on the other hand since the date of birth, the fast growing PV industry in China has been strongly relying on the government subsidy which partially triggered the “countervailing and anti-dumping” investigations. Bankruptcy of the once leading enterprise has once again put the PV industry in China into a life or death situation.

The downturn of the international markets means crisis as well as opportunities. In February 2012, the government released the “Solar photovoltaic industry development plan during the 12th Five-Year plan period” in which the government will assist the continual development of the solar photovoltaic industry. In particular the government encourages cultivating a super industrial leader with annual sale exceeding 100 billion yuan ($16 billion) and 3-5 companies with annual sale exceeding 50 billion yuan ($8 billion). This again will lead to another industrial storm.

Editorial comments:

While the government actions is necessary to support the PV industry which is definitely a rising business in today’s economy focusing on the green energy consumption, the government should in the long term relax its interference over the development of the industry and instead focuses on the development of the international coordination mechanisms regarding the trading conflicts.

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