China calls for ‘concerted’ industry efforts to tackle excess solar production

China has called for “concerted efforts” to ease its solar power industry’s severe overcapacity crisis, as part of Beijing’s campaign to end a fierce price war.

The proposed measures include capacity control, standard guidance, price enforcement, mergers and acquisitions and intellectual property protection “to promote the high-quality development of the photovoltaic industry.”

China’s solar manufacturing capacity far outstrips global demand, triggering a domestic price war in recent years.

The country makes more than 80% of the world’s solar panel components, per the International Energy Agency, but its industry has been battling with an overcapacity problem because of intense domestic competition, which the Chinese government has called “involution.”

The push comes shortly after a meeting on Friday between agencies, including China’s Ministry of Industry and Information Technology and the National Development and Reform Commission, as well as the China Photovoltaic Industry Association and major state-owned power generators that buy solar, such as China Huaneng Group and China Datang Corp.

“The meeting required strengthened inter-departmental coordination and concerted efforts to continuously deepen the governance of the photovoltaic industry, and to fully promote comprehensive governance related to ‘anti-involution,'” China’s Ministry of Industry and Information Technology said in a statement on Monday, per a Google translation.

China’s solar overcapacity issue has been further compounded by a sense of growing resistance from high-value overseas markets, with the U.S. aggressively imposing tariffs on solar products from China and the European Union diversifying its solar supply chain away from Beijing.

In response, China’s government has launched an “anti-involution” campaign, seeking to slash production capacity and put an end to disorderly pricing schemes.

Analysts have told CNBC that the fallout from the U.S. and Israel-led Iran war is likely to expedite a shift away from fossil fuels and make countries think differently about the role renewables can play in shoring up energy security, potentially delivering a boost to demand for solar.

Chinese solar manufacturers told Reuters last week, however, that any expected boost to global renewables demand due to the Iran war energy price shock was unlikely to ease the industry’s overcapacity challenge.