Chinese solar panels

Interesting writeup on China's solar panel business -- from The Weekly Standard:

The Mother of All Solyndras
When solar panel maker Solyndra declared bankruptcy in September 2011, the Obama administration defended its $535 million loan guarantee to the company by touting the need to compete with China. At a congressional hearing, Jonathan Silver, then executive director of the Energy Department�s Loan Programs Office, said, �[In 2010, China] alone provided more than $30 billion in credit to the country�s largest solar manufacturers through the government-controlled China Development Bank. That�s roughly 20 times larger than America�s investment in the same time period.�

Since then, China has shown the world that massive government subsidies are no guarantee of business success. Today, the solar industry worldwide is suffering from oversupply, weak demand, and depressed prices, and many of China�s solar manufacturers are fighting huge financial losses, debt, and bankruptcy. Not surprisingly, the Obama administration, which was eager to follow China down the path of spending big on clean energy, has had little to say about the lessons to be learned from the current disarray of China�s heavily subsidized solar industry.

The crux of the problem:

Bent on promoting China�s leadership in green technology, Beijing has directed a flood of government subsidies, tax breaks, and massive credit lines from state banks into the solar industry, and local governments have offered benefits like cheap land. In the process, China became the largest solar exporter in the world. Its top manufacturers, such as Suntech Power, Trina Solar, Yingli Solar, JA Solar, and LDK Solar, were publicly listed on U.S. stock exchanges. For the year 2012, Solarbuzz, a market research website, estimated that China would account for 76 percent of all solar wafer production in the world.

Yet China has also saturated the solar industry with overcapacity. A recent solar market research report released by GTM Research and the Solar Energy Association reveals that global solar manufacturing capacity stands at 70 gigawatts, even though only an estimated 31 gigawatts are needed. China is responsible for much of the glut, and as another GTM report cited by the New York Times indicates, Chinese companies alone had the ability to manufacture 50 gigawatts of solar panels last year.

Inconveniently for the Obama administration, those market forces that it likes to dismiss affect even companies favored by the state. China�s rush to boost capacity in a hot new industry seemed like a great idea until the market sank. First the 2008 global financial crisis caused a worldwide economic downturn. Then the financial turmoil plaguing Europe since 2010 caused countries like Germany, Italy, and France to reduce government subsidies for solar power significantly. According to the Chinese press, some 70 percent of China�s photovoltaic solar modules are exported to Europe. Thus, Europe�s budget cutbacks have significantly weakened demand for solar imports from China.

Ahhhh -- the joys of central planning versus a hands-off vibrant market economy.