Sheep graze at the Gonghe Photovoltaic Industry Park of the Qinghai Yellow River Upstream Hydropower Development Co. Ltd. in Hainan Tibetan Autonomous Prefecture, Qinghai Province, on June 18, 2025. (XINHUA)

As China accelerates its journey toward its ambitious dual carbon goals—peaking carbon emissions by 2030 and achieving carbon neutrality by 2060—the photovoltaic (PV) sector has emerged as a cornerstone of the nation’s new energy architecture. China now boasts a globally leading PV supply chain. However, this success masks a precarious reality: The industry is currently weathering a perfect storm of overcapacity, cutthroat internal competition, and shifting global trade dynamics. 

Liu Hanyuan, a deputy to the National People’s Congress (NPC), Vice Chairman of the All-China Federation of Industry and Commerce, and Chairman of the Tongwei Group, one of the world’s largest solar manufacturers, is calling for a structural overhaul. At this year’s Two Sessions, the annual meetings of China’s top legislature and the top political advisory body, Liu proposed that China’s PV manufacturing sector be classified and managed as an energy industry sector, rather than as a general manufacturing sector. 

He said, currently, China’s solar manufacturing capacity exceeds global demand by more than two folds. According to him, this glut has triggered intense, and often irrational price competition in the country, leading to total industry losses exceeding 100 billion yuan ($14.5 billion) over the past two years; market confidence has withered, with the total market value of the industry in China shrinking by nearly 4 trillion yuan ($552 billion) from its historic peak. 

“If this trend persists, it could trigger a series of chain reactions, threatening national financial security,” Liu warned. Simultaneously, the geopolitical landscape is shifting. With the United States and India aggressively incentivizing local manufacturing, international market competition has intensified and the growth of China’s PV export slowed to a mere 2.1 percent in 2025. 

Liu Hanyuan

Liu said that the PV industry’s role as the engine of China’s energy transition warrants a strategic upgrade in its governance. By moving PV manufacturing under the umbrella of energy sector management, the nation can better align PV production with its energy security needs, he added. 

At the heart of Liu’s proposal is a call for a more integrated and secure approach to managing the sector. Firstly, he advocates for a centralized management framework, led by the National Development and Reform Commission and the Ministry of Industry and Information Technology, to synchronize manufacturing capacity with energy development and grid expansion. This would foster a synergistic relationship between production, application and consumption. 

Building on this coordinated approach, Liu emphasizes the need for implementing a production-by-demand mechanism. This would involve establishing price warning systems and, if necessary, emergency intervention measures to prevent the kind of extreme market volatility the industry is currently experiencing. 

To underpin these efforts, Liu calls for enhanced monitoring, which includes creating a unified national platform to oversee everything from production to consumption. Crucially, he proposes incorporating polysilicon—the essential upstream raw material—into the national energy security reserve system, a move designed to ensure supply chain resilience against global disruptions. 

Liu’s call represents a pragmatic attempt to avoid the boom-and-bust cycles that have historically plagued emerging energy sectors, and reflects a desire to move toward a sustainable and secure global energy future. 

Copyedited by G.P. Wilson 

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