How Chinese Subsidies Changed the World [Harvard Business Review] #RisingChina #Solar #GovernmentSubsidies

Unfair or unacceptable paradigm? China finances its economic reach to extend its soft power. It is perhaps, simply, a more synergistic strategy between state and its business sector.

Chinese solar products I use have proven ruggen and hardy, down to the little solar toys.

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How Chinese Subsidies Changed the World
by Usha C.V. Haley and George T. Haley |
Harvard Business Review, published April 25, 2013

Last week, LDK Solar, a struggling Chinese manufacturer of solar wafers and panels, announced that it had missed $24 million in bond payments. This news followed the bankruptcy in March of Wuxi Suntech, the main operating subsidiary of the world’s largest maker of solar panels, after it defaulted on a $541 million bond payment.

It is no coincidence that this upheaval in the Chinese solar industry is occurring at a time when the central government’s subsidies that had financed the industry’s explosive expansion have declined even as problems in the global solar-panel market have soared.

Since 2008, through government subsidies, the manufacturing capacity of China’s solar-panel industry grew tenfold, leading to a vast global oversupply. A surge in exports of Chinese panels depressed world prices by 75%. In 2012, China’s top six solar companies had debt ratios of over 80%. Our research showed that without subsidies, these companies would be bankrupt. If the Chinese government sticks to its decision to stop funding unprofitable solar-panel manufacturers and support a revamping of the industry, more bankruptcies and restructurings are sure to follow.

Please click here to read the full article at the Harvard Business Review.

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