China Proposes Regulation to Restrain Growth in Solar Industry Expansion

A draft regulation has been issued by the Chinese government aimed at limiting the expansion of the country’s industry. This move comes in response to domestic firms facing financial losses due to an excess supply of solar products and intense competition in the market.

The Ministry of Industry and Information Technology released the draft rule for public feedback on Tuesday, revealing plans to restrict new manufacturing projects that simply increase current production capacity. Instead, companies are encouraged to focus on enhancing product quality and reducing production expenses.

In recent years, Chinese solar manufacturers have been grappling with a situation where their production capacity surpasses actual market demand. This imbalance has led to a steep decline in prices and has compelled many companies to sell their products at a loss. Consequently, there have been mounting calls from industry players for government intervention to alleviate the oversupply issue.