Over the past decade, China's photovoltaic (PV) industry has grown into a global leader in technology, quality, brand recognition, and production scale. It has become one of the most prominent examples of China's emerging strategic industries. However, since 2011, the sector has faced significant challenges, entering a period of intense difficulty.
The year 2012 was particularly tough for the global PV industry. A combination of overcapacity, chaotic competition, trade barriers, and the lingering effects of the financial crisis led to a quarterly drop in solar module prices by 10–15%. This decline put immense pressure on companies, with rising inventory levels, accumulating receivables, and ongoing losses. According to reports, the total loss incurred by Chinese PV module manufacturers in the first three quarters of 2012 reached 20 billion yuan. The sustainability of the entire industry was under serious threat.
Faced with these challenges, the Chinese central government took notice. Senior officials from the State Council and various ministries conducted extensive investigations in key PV regions and companies, seeking to understand the situation and hear their concerns. On December 19, 2012, Premier Wen Jiabao chaired a State Council executive meeting, where five key policy measures were announced to promote the healthy and sustainable development of the PV industry. These measures aimed to revitalize the sector through collective effort and coordinated action.
Gao Jifan, Chairman and CEO of Trina Solar, expressed his appreciation for the spirit of the meeting. He emphasized the importance of focusing on the five policy measures, including improving product quality, fostering innovation, and opposing all forms of unfair competition such as selling below cost or implementing trade protectionist policies that hinder industry growth.
Gao further explained that, despite the current industry-wide losses, it is crucial not to resort to short-term fixes like price dumping or neglecting quality and innovation. Such practices do not help individual companies grow and instead distort the true cost of PV products. This misalignment affects how governments set grid-connected tariffs, leading them off a reasonable downward path. As a result, the expected returns on solar power projects are undermined, which is detrimental to long-term industry development.
He also warned against relying on temporary trade protection measures, which may provide short-term relief but fail to build a sustainable foundation for companies. To achieve lasting progress, the industry must adhere to principles of fair competition, reasonable market practices, and free trade. First, policies need to be stable and based on the real costs of PV products to encourage innovation and continuous investment. Second, companies should prioritize quality, efficiency, and innovation rather than engaging in destructive competition. Finally, the entire supply chain must work together toward the goal of achieving grid parity through international collaboration and division of labor, ultimately driving a structural transformation in the energy sector.
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