It has been almost a month since China's solar industry set a floor price in order to curb cut-throat competition among its members, but some opportunists are taking advantage of loopholes to circumvent the restrictions, according to industry sources.
Some second-tier and third-tier solar product makers are buying B-grade products from top-tier vendors, repackaging them into, for example, PV modules and reselling them as A-grade ones through flexible ways that are making the price floor irrelevant, the sources said.
Major A-grade product suppliers that are abiding by the price floor are facing such hit-and-run competition from smaller rivals whose repackaged products will probably develop problems after some use.
The sources said the Chinese solar market remains trapped in a price war with customers still giving priority to pricing over quality. Suppliers of A-grade products are still being denied reasonable profits by substandard competitions disguised as regular ones.
Over-capacity and shrinking domestic demand
Oversupply has been a major problem. Production capacity in China is almost two times the global demand for solar products, and domestic demand is shrinking due to market saturation. In fact, many regions in China can no longer handle the impact of solar power installations. As of early October 2024, 38 regions in China have issued bans on new solar power installations, the sources cited Chinese media reports as indicating.
Worse still, geopolitical tensions are limiting Chinese solar products' access to the international market. The US is levying tariffs on Chinese solar product imports and imposing control on Chinese makers' production in the US. The US has also imposed trade sanctions on four Southeast Asian countries where Chinese makers run production plants. India is also making moves to curb solar imports from China.
The opportunists' circumvention of restrictions may be giving other countries more reasons to ban Chinese imports, the sources said.
Export tax rebates slashed
The Chinese government is making moves seeking to deter these opportunists. It has announced a reduction in tax rebates from 13% to 9% for exports starting December 1, 2024.
The reduced tax refunds will help increase the national coffer and block second- and third-tier solar firms from exporting their products. Many of these small makers have been relying on tax refunds to survive the cut-throat price competition.
But China's modules will remain the most price-competitive in the world. The reduced tax rebates may result in higher prices for the exports, but they will still be the cheapest available in the market.
Article translated by Rodney Chan
