Photovoltaic Redemption: Half Bitterness, Half Misdirection

Introduction: Whether China's photovoltaic industry needs redemption has sparked heated debate. Many believe it doesn't, arguing that market-based clearing is the solution. While market mechanisms are essential for economic vitality, as evidenced by China's post-reform economic boom, the increasing intervention of local governments contradicts this ideal. The notion of complete market-based clearing now seems naive. Photovoltaic redemption: half bitterness, half misdirection. Can we find our way back?

01 Quzhou State-owned Assets Rescue YiDao New Energy A recent announcement on the Shanghai Municipal Administration for Market Regulation website revealed that Quzhou's State-owned Assets Supervision and Administration Commission (SASAC) now controls YiDao New Energy. YiDao New Energy has found a "new owner." Regardless of whether it's the Three Gorges Corporation or CATL, the previous owners are now history.

(Data Source: InfoLink) In 2024, YiDao New Energy ranked ninth globally in component shipments, establishing itself as a leading photovoltaic component manufacturer. However, its focus on the domestic market (91% of revenue in 2023 from China) might have made it vulnerable. After its failed IPO, rumors circulated of Three Gorges Corporation's intention to divest from YiDao New Energy, casting a shadow over this company with "LONGi genes" and previous backing from Three Gorges. In 2024, with increased competition in the photovoltaic sector, this leading component manufacturer faces even greater pressure. Caught between the loss of a major client and state-owned enterprise backing, unending internal competition, and fierce technological disputes, YiDao New Energy is struggling. Rumors of CATL's potential acquisition briefly boosted its value, yet it remained unsold. With endless competition, who would be interested in acquiring such significant photovoltaic assets? As its headquarters and main production base are in Quzhou, YiDao New Energy could only be rescued by Quzhou's state-owned assets. It's stated that Quzhou's state-owned assets taking a strategic stake in YiDao New Energy marks a key step in its expansion in the new energy industry chain. Through technical, capital and resource synergies, they aim to create a leading domestic platform for new energy technology innovation and industrialization. However, do local SASACs truly have the capability to help photovoltaic companies overcome challenges, or are they merely delaying the inevitable? 02 Increasing Involvement of Local State-Owned Assets Supervision and Administration Commissions According to grassroots photovoltaic statistics: The controlling shareholder of ZL Solar has changed from Mr. and Mrs. Lin Jianwei and Zhang Yuping to Zhejiang Energy, a subsidiary of Zhejiang Energy Group, ultimately controlled by Zhejiang's SASAC. Following Jianfa's takeover of *ST Zhongli, this 37-year-old company is now controlled by Xiamen's SASAC. In a 1 billion yuan investment, Yancheng SASAC's Jiangsu Yueda Group became the largest shareholder of Runyang, and the chairman changed from Tao Longzhong to Zhang Naiwen. Equity structure shows Tao Longzhong holds 40.2772% of Runyang, while Shanghai Yueda holds 19.4824%. The Zheng Jianming family's assets, including Shunfeng Photovoltaic and Wuxi Suntech, were pledged to China Orient Asset Management, which authorized Jianfa New Energy to "manage" them. Thus, Wuxi Suntech also became essentially state-owned. In addition, Yingli Energy, previously assisted by state capital, is another example. As the industry becomes increasingly competitive, more and more local governments are rescuing local photovoltaic enterprises to protect local interests. This raises the question of how this widespread involvement of local governments and SASACs will impact future supply-side trends. A mystery indeed. 03 Half Bitterness, Half Misdirection While China's economy has benefited from market reforms, we must acknowledge potential market failures. A socialist market economy, built on institutional advantages, cannot rely solely on market forces to solve its challenges. Local government intervention in local industries is understandable and even beneficial from a resource perspective. However, these individual acts inadvertently contribute to systemic failures, creating complexities in the already competitive photovoltaic sector. China's photovoltaic industry has suffered immensely in recent years, with low prices and international criticism. A recent encounter with Dr. Song Dengyuan of YiDao New Energy revealed the industry's struggles and widespread misunderstanding of technological aspects. The bitterness and crisis are evident, yet we remain entangled in debates about intervention and market mechanisms. Market failures necessitate government intervention; this should be a strength of our socialist system. The challenges extend beyond internal competition to include the potential for negative consequences of overseas expansion, jeopardizing the long-term interests of China's photovoltaic industry chain. With both internal and external problems, can we afford inaction? 04 How to Save the Photovoltaic Industry Our photovoltaic industry deserves protection. Solutions include supply-side reforms, strengthening top-level design, regulating local government financing behavior, curbing overseas expansion, defining and limiting new advanced production capacity, incorporating overseas capacity into overall planning, preventing malicious financing and subsidies, promoting mergers and acquisitions to reduce the number of companies, controlling financing scales across the industry chain, and preventing cascading effects of debt defaults. A comprehensive assessment of the impact of overseas technology transfer and joint ventures in photovoltaic production with minority shareholders on the long-term competitiveness of China's photovoltaic technology and the risk of technology leakage. Appropriate policies should be introduced in a timely manner to regulate behavior and avoid excessive involution affecting China's leading position in the global industrial chain; Necessary regulations and restrictions should be imposed on enterprises whose loss rate and operating rate exceed the industry average. Regulations should be implemented regarding refinancing in the capital market, mortgage financing, and financing with personal guarantees to prevent malicious involution...