Asia Report: China Solar Shares Soar as Government Bails Out Sector
By
Oliver Wagg, International Correspondent
December 18, 2012 SYDNEY -- Shares in Chinese solar companies soared after the government allocated a further 7 billion yuan ($1.1 billion) of subsidies for domestic installations this year, taking the year's total to 13 billion yuan ($2 billion), according to the official Xinhua News Agency. News of further financial support came after Xinhua reported China may double its upper limit for solar power capacity to 40 GW by 2015. Elsewhere, the Shanghai Securities News said officials may double their target for solar installations, while China’s Ministry of Science and Technology confirmed subsidies for more than 100 developers with a combined capacity of 2.8 GW. The payouts, under the Golden Sun program, are the second round announced this year. Stocks to benefit included Trina, Yingli, JA Solar and LDK, as the actions rescue the biggest solar-panel manufacturers and their suppliers after a glut of capacity depressed prices and profits worldwide. In recent weeks, the government also extended loans to the industry through China Development Bank and allowed local authorities to extend support. "What Beijing is doing is essentially trying to replace the diminished export sales with lower price, lower margin domestic sales," Raymond James analyst Pavel Molchanov told Reuters. "It is a backdoor bailout." News of the subsidies came as the China PV Industry Alliance forecast a 40% drop in export volume of PV solar products and an 80% plunge in domestic orders for manufacturing equipment for PV solar products. "Up to 90 percent of Chinese poly-silicon producers have stopped production because of the falling demand,” said Wang Bohua, secretary general of the body. Even though some large companies are trying hard to keep producing, their capacity utilization is low."
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