China’s rush to bail out Suntech Power and other solar panel makers is condemning its solar sector to a worsening glut, as demand remains stubbornly stagnant, both at home and abroad.
As prices crumble in the once high-flying solar panel industry, Chinese authorities fear that letting uneconomic manufacturers collapse will destroy tens of thousands of jobs and increase the potential for unrest.
On the other hand, throwing these firms a lifeline is a drain on public finances and just adds to over-supply. Against global demand for 30-35 gigawatts (GW) of solar power this year, supply is 50-60 GW, most of which is in China, according to some industry estimates.
While local authorities in China continue to bail out solar panel makers to preserve social stability, governments suffering from strained finances are withdrawing the incentives that could spark increased demand.
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