China Moves To Curb Solar Overcapacity After Emergency Industry Meetings

• Beijing pressed solar manufacturers to rein in “disordered” price competition and phase out outdated capacity after fresh talks with industry leaders, signaling tighter policy ahead.

China has put its solar industry on notice. Following another closed-door meeting with leading manufacturers, the Ministry of Industry and Information Technology (MIIT) urged companies to curb “disordered competition,” accelerate consolidation and push out inefficient, older production lines. The guidance, which comes amid steep losses across polysilicon, wafers, cells and modules, aims to restore profitability after a year of heavy discounting and layoffs.

Officials hinted that more prescriptive steps could follow if voluntary measures fall short—an implicit threat as inventories remain high and demand growth proves lumpy quarter to quarter. Analysts say any credible reset would likely require retiring 20%–30% (or more) of upstream capacity while enforcing stricter standards on energy intensity and product quality. That would mark a sharp pivot from the recent “volume at all costs” mindset that left some plants running below cash costs.

For global buyers, the near-term picture is mixed. Any meaningful curtailment could lift upstream prices and ripple through to modules later this year, complicating budgets for projects banking on continued cost declines. Yet a more orderly market could reduce whiplash, improve bankability and open room for non-Chinese investment in cells and wafers to gain a foothold. Watch for signals from provincial governments—often protective of local jobs—on whether they will back closures or offer lifelines to struggling facilities.

Policy clarity matters as much as capacity cuts. If Beijing layers in performance, carbon and reliability standards as gatekeepers to subsidies and credit, the shake-out could favor higher-efficiency lines and larger, financially stronger players. That, in turn, would stabilize lead times and quality for developers planning 2026–2027 builds. But if discipline frays when prices tick up, another cycle of boom-bust could follow. Either way, today’s message is unambiguous: the price war has gone too far, and the government wants the industry back on sustainable footing.