China’s booming solar industry is facing mounting pressure as demand weakens and a wave of overcapacity threatens profitability for some of the world’s largest manufacturers.
According to a report by Bloomberg, the second half of 2025 could mark a turning point for China’s solar sector, with installation rates expected to drop sharply after a policy-driven surge earlier this year. While the nation added a staggering 45 gigawatts of solar capacity in April alone—more than triple last year’s April figures—analysts caution that this spike was fueled by developers rushing to complete projects before new regulatory changes took effect.
Two policies in particular are reshaping the market. One restricts rooftop solar installations, a fast-growing segment in recent years, while the other eliminates fixed price protections for solar energy producers, forcing them into a competitive market at a time of electricity oversupply. These shifts are contributing to uncertainty and pulling forward demand that might otherwise have supported the industry over a longer period.
Despite record expansion, many Chinese solar firms are struggling under the weight of razor-thin margins and growing international protectionism. Five of the country’s biggest manufacturers—including JA Solar, Jinko Solar, Longi Green Energy, Tongwei, and Trina Solar—posted a combined loss of over 8 billion yuan ($1.1 billion) in the first quarter of 2025.
“Overcapacity remains a Sword of Damocles hanging over our heads,” said Zhu Gongshan, chairman of GCL Technology Holdings, during the SNEC International Solar Industry Expo in Shanghai this week. “The second half of this year to the first quarter of next year is a crucial window period for the supply-side reform of the photovoltaic industry.”
Industry experts warn that this imbalance between supply and demand may worsen before it improves. Citigroup forecasts a steep drop in installations in the second half of the year—down to 90–95 gigawatts from a record 155–160 gigawatts in the first half. BloombergNEF analyst Zhao Tianyi predicts a sluggish third quarter, followed by a potential rebound later in the year as developers race to meet deadlines for large-scale utility projects and adjust to new pricing rules.
Still, longer-term prospects remain intact. The Chinese government continues to prioritize clean energy, grid upgrades, and market reforms aimed at integrating renewables more efficiently. BloombergNEF estimates that solar installations will still grow 9% year-over-year, reaching 302 gigawatts in 2025.
Yet, even with growth on the horizon, industry insiders at this week’s conference acknowledged the need for strategic reforms. Calls for greater supply-side coordination, reduced production, and high-quality development dominated discussions.
For now, the solar sector must navigate an uneasy transition—one that will test the resilience of even its most established players.
Source: Bloomberg, via The Japan Times
https://www.japantimes.co.jp/business/2025/06/11/tech/china-solar-industry-demand/