China Solar Needs Subsidies

All photovoltaic industries in the world depend on government subsidies. China is going down that road as well.

Shi Dinghuan has stated that what China's solar power manufacturing industry needs is a more active set of government policies to support and subsidize the adoption of solar power domestically, along the lines of the industrial policies that have created significant growth in the Chinese wind industry (see recent article). Because the use of solar power in China has been insignificant, the potential for growth is outstanding.

Very recently the framework of such policies intended to jumpstart domestic solar power demand and turn around China's overly export-oriented PV industry has begun to emerge. In late March, the Chinese Ministry of Finance promulgated its {Interim Measures for the Administration of Government Subsidies of Building Uses of Solar Energy Photovoltaic Power} (called "Interim Measures") and the accompanying {Implementing Opinion Concerning Speeding Up the Promotion of the Use of Solar Energy PV Power in Buildings} (called "Solar-Powered Buildings Promotion Opinion"), which together provide a framework for the implementation of China's "Solar-Powered Rooftops Plan."

This may make some sense in areas of China that are far from power lines. It makes no sense where access to the Chinese grid is available.

This is all part of the Chinese stimulus plan.

Asia's financial markets greeted China's massive stimulus plan warmly, but with caveats that underscored concern that economic stability in China won't by itself reverse global trends.

The size of the stimulus plan solidified Beijing's position as a pivotal economic policy maker in the region and the world. "It lends weight to the importance of China," said John Vail, chief global strategist at Nikko Asset Management in Tokyo. "But of course, China is leaning against some pretty serious headwinds."

Asian currencies, stocks and commodity prices bounded higher from Shanghai to London on Monday, hours after the government unveiled a two-year stimulus package it valued at around four trillion yuan, or $586 billion. The government said it would build infrastructure, fund housing, cut business taxes and encourage banks to lend money, all in a bid to offset slowing global growth by boosting the spending power of its people.

And that is not all the Chinese stimulus plan will do. It is also intended to stimulate the Chinese manufacturers of consumer electronics.

...a consumer stimulus plan implemented by the Chinese government designed to drive consumption of electronics and appliances by citizens living outside the major urban regions," he said. "This has prompted a supply chain scramble in select markets, namely LCD TV, netbooks, consumer based notebooks and low-end handsets."

There are other positive signs. "While there are widespread rumors of more Chinese stimulus to come, some suppliers are expressing skepticism that these recent order gains will extend past the short-term," he added.

It will be interesting to see if the effort has its intended results. One possibility is increased unrest caused by Chinese citizens who will find it easier to organize protests against the Chinese government.

Bankruptcies, unemployment and social unrest are spreading more widely in China than officially reported, according to independent research that paints an ominous picture for the world economy.

The research was conducted for The Sunday Times over the last two months in three provinces vital to Chinese trade – Guangdong, Zhejiang and Jiangsu. It found that the global economic crisis has scythed through exports and set off dozens of protests that are never mentioned by the state media.

Can we expect to hear (through clandestine channels) of tea parties (or equivalent) in China? Time will tell and hopefully the Sunday Times will report it.

Cross Posted at Classical Values