China solicits views on tighter rules drafted to curb solar sector overcapacity

The Chinese government has drafted rules aimed at controlling the expansion of the country’s solar industry, as the sector struggles under excess capacity after triggering a collapse in global prices.

China’s Ministry of Industry and Information Technology (MIIT) is soliciting feedback from the public on rules that require minimum capital ratios for both new and expansion projects of 30 per cent. Earlier, that floor was applied to polysilicon manufacturing projects while the minimum for other projects producing wafer, cell, and modules was 20 per cent. The draft will be open for comments until July 15.

MIIT also ordered solar companies to spend a minimum of 10 million yuan, or 3 per cent of total sales whichever is higher, on research and development process and product improvement. The annual output of solar manufacturing projects should also be at least 50 per cent of their annual production capacity, according to the draft regulations.

The rules were issued to “strengthen the management of the photovoltaic industry, guide the industry to accelerate upgrading and structural adjustment, and promote the photovoltaic industry’s high-quality development”, MIIT said.

The ministry said the country’s solar companies should refrain from establishing new photovoltaic (PV) manufacturing projects simply for the sake of expanding production capacity, and should instead focus on strengthening technological innovation, improving product quality, and cutting production costs.