China announces strange mobilization — 87,000 people signal the end of photovoltaics

China has been at the forefront of technological innovation for decades, and sometimes it pays the price before the rest of the world. As one of the first countries to really power up on solar panels, the Chinese companies deal with every problem before anybody else, while the rest of the industry learns from their mistakes. Now, this is leading to a new era in which solar can be overused; otherwise, it will cause problems in the economy of the country – it even had President Xi Jinping demanding changes in the sector as soon as possible.

China focused on three markets: Two have worked out, the other will have to change

From 2020 to 2023, China doubled down on three different sectors: solar energy, electric vehicles, and batteries. The EV projects and batteries were a success, and Chinese car manufacturers are leading the market in many countries in Europe and South America. Beyond that, there is already an expansion going on for a new BYD factory in Hungary.

In the battery industry, things are even better: the company has contracts with many manufacturers to sell batteries for their cars. However, when it comes to solar panels, things get more delicate. The country created more panels than they needed – to keep it or sell – and now people will suffer the consequences of the market dispute, as there are more panels than people to buy, which puts the industry in jeopardy. Exportation tariffs and other factors are also to blame.

China is cutting investments: Solar energy will have fewer people involved shortly

Reuters reported that China’s main solar companies cut almost one-third of their workers last year. According to their review of company filings, giants like Longi Green Energy, Trina Solar, Jinko Solar, JA Solar, and Tongwei together let go of around 87,000 employees — about 31% of their staff.

These cuts weren’t heavily publicized because layoffs are politically sensitive in the country, where keeping jobs stable is seen as a top priority by the government. The reason is simple: there are too many panels and not enough buyers. The world is producing twice as many solar panels as it uses, and since most of this production comes from China, the oversupply hits hardest there. Companies have been battling a brutal price war that has dragged profits down.

2024 was not a good year: Billions were lost, and core materials became more expensive

Last year alone, the industry lost about $60 billion. Reuters noted that U.S. tariffs on Chinese exports made things even worse, adding to the wave of collapsing prices. Beijing has started to step in — polysilicon prices jumped nearly 70% in July, while solar panels saw smaller increases. On the other hand, other technologies are also in sight.

Even so, the demand at home is not strong enough, and internationally, countries aren’t absorbing all this extra supply either. In response, big producers are planning an “OPEC-style” arrangement to manage supply and prices, Reuters reported. They are also raising a 50-billion yuan fund to buy up and shut down lower-quality factories. 

The country’s leader has expressed his wish: companies could cut more soon

All of this goes back to Beijing’s big push five years ago to flood the market with solar capacity. That strategy worked for a while, but now China is trying to undo part of it, which shows the risks of heavy central planning. President Xi Jinping has already asked companies to end what he called “disorderly price competition,” and the industry ministry has pledged to calm the market and cut outdated production. Meanwhile, Japan is innovating and creating market trends that others will have to adapt to, eventually.

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