China's PV industry boosted by government support

Measures announced by China's cabinet intended to boost the country's struggling photovoltaic (PV) sector have shown positive signs as industry stocks surged on Thursday.

PV industry-related stocks increased, with Hairun PV rising 5.89 percent to close at 6.23 yuan (about 1 U.S. dollar) per share, and Kehua Hengsheng Co., Ltd. jumping 8.85 percent at 8.80 yuan (1.4 U.S. dollars) per share.

On Wednesday, according to a statement after an executive meeting presided over by Premier Wen Jiabao, structural adjustments and technological improvements in the sector will be speeded up, as well as encouraging mergers and restructuring among manufacturers to phase out outdated capacity.

Experts said such measures showed the government's resolution to boost the PV industry, which has been plagued by excessive capacity and obstacles in overseas expansion.

"China's PV industry has had difficulty selling products overseas due to anti-dumping probes initiated by the United States and Europe," said Dong Xingxue, chairman of LDK Solar Co., one of the world's largest manufacturers of solar wafers.

Other government policies to support the sector include setting on-grid electricity prices according to local conditions and subsidizing the usage of PV-generated power. Also, paying more attention to market forces and reducing government interference in the sector.

"I think these policies will be very helpful for the domestic PV manufacturers to step out of the present predicament," said Tong, adding that "perhaps the toughest time is passing."

The moves will boost domestic demand and help the solar panel producers survive the current hardship, which is too dependent on the overseas market, according to Meng Xiangan, secretary-general of the China Renewable Energy Society.

The country's PV industry should shift to the domestic downstream power generation sector to offset their export losses, said Meng.

According to a report released by the National Energy Administration in August, China will have 21 million kilowatts of installed solar power generation capacity by 2015, six times more than currently.