Chinese Premier wants banks to support domestic PV industry

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Reiterating China’s need to reduce emissions, Premier Li Keqiang told the State Council executive that the country needed to implement a range of key policies to support the domestic PV industry.

Li Keqiang acknowledged that domestic PV manufacturers were facing financing difficulties and sent a message to ‘financial institutions’ to help alleviate the problem, without providing specific details.

In recent months, Hanwha SolarOne management had noted in financial conference calls that Chinese domestic PV manufacturers were faced with very a credit environment that had become more disciplined, forcing companies to halt capacity expansions and focus on improving margins and returning to profitability.

Jay Seo, CFO at Hanwha SolarOne noted in the most recent call that: “A large number of inefficient players have substantially reduced or shutdown operations or have become financially insolvent, resulting in reduced industry capacity throughout the solar value chain.” Korean-owned Hanwha SolarOne has its manufacturing operations in China.

The Chinese premier also said that the country ‘should focus on steady growth with initiatives to expand domestic PV demand, to build China's economy “upgrade.”

However, supporting the rationalisation within the sector via consolidation was also reiterated, yet support was also suggested to be given to R&D and technology innovation to support consolidation across the industry not just within the Chinese domestic market. 

To support the growth in domestic PV installations, acknowledgement was given to the grid difficulties, which would see government give PV a priority to reduce delays and bottlenecks.

Emphasis was also placed on further support to build a competitive materials and manufacturing equipment sector, a message given by state officials at various events at SNEC last year, which would include strengthening industry standards.

Highlighting the PV industry and principles the government wants to see implemented to strengthen the industry sector both internally and internationally comes at a time when air pollution prevention and control measures are becoming a major issue in China.

However, the expected support of Chinese banks, which have been increasingly reluctant to supply much needed capital to a number of struggling players will raise international concerns that industry consolidation will become a protracted exercise, and prolong the period of profitless prosperity.

The threat to support ailing PV businesses could also been seen as another bargaining piece in the ongoing trade war dispute with Europe.

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