The State Council prohibits local protection of the photovoltaic industry

The State Council has taken a decisive step to address the challenges facing China's rapidly growing photovoltaic (PV) industry. In a recent meeting, it was acknowledged that while the sector has made significant progress, it now faces serious issues such as overcapacity and excessive reliance on foreign markets. To ensure sustainable development, the government has decided to reduce its intervention and ban local protectionism, allowing market forces to play a more central role. On the 19th, Premier Wen Jiabao presided over an executive meeting of the State Council to outline key policies aimed at promoting a healthier and more competitive PV industry. The meeting emphasized that the photovoltaic sector is a strategic emerging industry with great potential to reshape China’s energy landscape. It plays a vital role in reducing carbon emissions, improving energy efficiency, and advancing environmental sustainability. Despite its growth, the industry currently struggles with high production capacity, limited domestic demand, and financial difficulties. However, the government sees these challenges as opportunities for transformation. With the cost of solar power generation dropping significantly, there is now a favorable environment to expand the domestic market. To address these issues, the State Council proposed several key measures. First, it will accelerate industrial restructuring and technological innovation, encouraging mergers and acquisitions while phasing out outdated production facilities. New projects that simply increase capacity—especially in polysilicon, PV cells, and modules—will be strictly controlled. Second, the government plans to regulate the industry's development by better aligning PV power generation with grid planning. A streamlined and efficient grid connection system will be established, along with improved technical standards and stricter oversight of equipment quality. Third, efforts will focus on expanding the domestic application of solar power. This includes promoting distributed solar systems for households, communities, and businesses, as well as developing large-scale solar farms. International cooperation will also be strengthened to maintain and grow overseas markets. Fourth, supportive policies will be enhanced. A regional benchmark price for solar power stations will be introduced, and subsidies for distributed solar generation will continue. Tariff and subsidy levels will be adjusted based on cost changes. Additionally, tax incentives similar to those for wind power will apply to solar projects. Finally, the government will rely more on market mechanisms and reduce direct interference. Pricing and subsidy effectiveness will be evaluated more transparently, and industry organizations will play a greater role in self-regulation. All relevant departments have been urged to quickly implement and refine supporting policies to ensure their effective execution. This comprehensive approach aims to make China's photovoltaic industry more resilient, innovative, and globally competitive.

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