China wrecks its own solar industry in a five-year disaster

After flooding the global market with solar panels at rock-bottom prices thanks to massive subsidies, China is now watching its own industry crumble under internal competition and the withdrawal of that support.

## The boom and bust of Chinese solar power

For years, **China** bet heavily on its photovoltaic industry, injecting vast amounts of public money. The goal was clear: dominate the global market. And they did. State aid allowed prices so low that international competitors, without that backing, simply could not keep up. The result was a world market dominated by Chinese products at unbeatable prices, leaving many manufacturers in other countries high and dry.

## Internal competition and a change of course

Once the market was cornered, Chinese manufacturers themselves began competing with each other, fueled by cheap money from **Beijing**. Prices became even more aggressive, creating an unsustainable profitability bubble. However, the Chinese Communist Party has shifted strategy in its latest five-year plan. Generous solar subsidies have been slashed dramatically, and the sector, which lived on that constant flow of public money, now finds itself in a critical situation, with mass bankruptcies.

## The end of a model?

China's development model, based on heavily subsidizing strategic sectors and then flooding the world market, appears to have shown its cracks. The solar industry is the latest example of how this strategy, while successful in the short term for gaining market share, can trigger internal collapse when conditions change. The open question is whether other sectors, such as electric cars or batteries, which have also received strong state backing, will trinc a similar path.