Against the complex and ever-changing backdrop of the current global economic and political landscape, China's photovoltaic industry is facing unprecedented challenges. The United States has increased tariffs to 125%, the European market is burdened with high inventories, and emerging markets are still hesitant and on the sidelines. As a result, the path for China's photovoltaic industry to go global has become extremely difficult, almost squeezed into a narrow slit. With the external market blocked, the domestic photovoltaic industry has no choice but to fall into involution. This year, the entire photovoltaic field seems to have pressed the "inventory clearance" button. Prices have been cut round after round, while inventories have piled up layer by layer, and profit margins have been continuously compressed. "Losing money on every order" and "some rushing to install while others lying flat" have become the daily scenes of the industry. Although every company is gritting its teeth and persevering, they are all struggling to reduce losses. What seems like fierce competition is actually more like self-harm. People can't help but wonder: Is this model of relying on involution to sustain the industry really a process of self-purification, or is it self-consumption? When external demand fails, will this "internal war" within the industry accelerate the reshuffle of the industry, or will it over-consume and hollow out the potential for future development?
Since the United States imposed a high tariff of 125%, it seems that involution is the only seemingly viable way for China's photovoltaic industry to save itself. When the barriers in the external market are numerous, the international market space left for Chinese photovoltaic enterprises is extremely limited, and "involution" within the industry is inevitable. Involution refers to a fierce internal competition cycle. In the photovoltaic industry, it is manifested as enterprises desperately reducing prices to grab orders in order to ship goods, continuously squeezing profit margins, and even getting involved in vicious price wars. Judging from this year's situation, this trend has already emerged: The price of silicon materials has plummeted since the end of 2022, which has led to a continuous decline in the price of components. According to statistics, in 2023, the prices of some photovoltaic products fell below the cost line, and corporate profits shrank significantly. A large number of small and medium-sized enterprises could hardly sustain themselves in this wave of price cold snap. It can be predicted that as the US market is basically closed and the growth of the European market slows down, China's photovoltaic industry will enter a new round of reshuffle. The first and foremost reality to face is overcapacity. In recent years, driven by the capital boom, the production capacity of all links in China's photovoltaic industry chain has expanded explosively. Taking silicon materials as an example, in the first half of 2023, the domestic production of polysilicon increased by 91.3% year-on-year, far exceeding the growth rate of downstream demand. The production capacity of batteries and components has also experienced leapfrog growth. Zhang Sen, Secretary General of the Photovoltaic Branch of the China Chamber of Commerce for Import and Export of Machinery and Electronic Products, pointed out that in 2022, China's annual component export volume was 154.5GW, a year-on-year increase of 53.8%, while the newly installed capacity in China that year was only about 87GW. That is to say, for a long time, the export scale of Chinese components has been larger than the domestic installed capacity, and the overseas market has been relied on to digest the excess production capacity. Once external demand is hindered, the excess production capacity will have nowhere to go, and enterprises will inevitably compete fiercely for limited orders. This involutionary competition is also reflected in the capital market. Since 2023, the A-share photovoltaic sector index has corrected sharply, and the stock prices of many leading enterprises have even been halved, reflecting the market's concerns about the industry's prosperity. The industry predicts that the growth rate of global photovoltaic demand this year may slow down to about 20%, while China's component production capacity far exceeds the demand, and the mismatch between supply and demand will continue to suppress product prices. Without sufficient external market support, enterprises can only reduce prices to stimulate limited demand, thus falling into a vicious cycle of "price reduction - loss - further price reduction". If we say that in the past decade, China's photovoltaic industry's cost reduction through economies of scale was a良性 competition, then in the future, in the closed environment caused by trade barriers, this cost competition may evolve into a fierce price battle. However, the survival of the fittest is also inevitable. The photovoltaic industry has gone through several rounds of cyclical reshuffles. For example, in 2011, the "double anti" measures in Europe led to the bankruptcy of hundreds of Chinese manufacturers, and in 2018, the sudden suspension of subsidies in China's "531 New Policy" caused a group of followers to go out of business. After each trough, the enterprises that survive are usually those with leading technology, excellent cost control, and strong financial strength. The current situation is the same. Leading enterprises, with their financial and scale advantages, are expected to further squeeze the living space of second and third-tier enterprises through low-price strategies and increase their market share. And backward production capacity lacking competitiveness will be phased out more quickly. Some "barbarians" who have crossed over into the photovoltaic field may have to withdraw sadly. To some extent, this brutal internal competition is also a process of self-purification and self-redemption for the industry. When it is impossible to rely on the high-profit export "cream cake" for development, enterprises can only improve their internal strength and carry out lean production to outperform their competitors and survive with lower costs and better products. Of course, "saving oneself through involution" is not a long-term solution, and it is impossible for China's photovoltaic industry to survive by constantly depressing profits. The way out lies in innovation and exploration. Currently, leading enterprises in the industry are increasing their R&D investment and actively promoting new technologies such as high-efficiency N-type batteries and perovskite laminates, hoping to achieve leapfrog progress in cost reduction and efficiency improvement through technological iteration. New technological breakthroughs will endow leading enterprises with the ability to obtain product premiums, enabling them to avoid falling into the quagmire of pure price competition. At the same time, enterprises are also actively exploring new market areas, such as distributed photovoltaics, integration of photovoltaics and energy storage, and power services, to find more diversified sales channels for their products. In addition, actively participating in emerging market projects along the Belt and Road Initiative and opening up new market situations through differentiated competition will also be one of the important breakthrough directions. It can be predicted that under the huge pressure of 125% tariffs, the internal part of China's photovoltaic industry will go through a difficult adjustment period. This period may be full of the cruelty of fierce competition, but after the adjustment, the industry is expected to be reborn from the ashes. Just like a phoenix rising from the flames, Chinese photovoltaic enterprises that have endured the pain of involution will become more resilient and competitive, laying the foundation for the next stage of globalization. As people say, "What doesn't kill us will make us stronger." This sentence may be very appropriate when applied to China's photovoltaic industry.
From a deeper perspective, the United States' imposition of a 125% tariff on China's photovoltaic industry appears to be a trade sanction targeting the photovoltaic industry on the surface. However, if we take a broader view, we will find that it reflects a deeper change of the times in the entire global industrial system. This is not just the photovoltaic industry facing sanctions alone, but an era of the entire global industrial system is undergoing a transformation. Looking back at the past few decades, the main theme of global industrial division of labor has been "efficiency first, global collaboration". Taking the photovoltaic industry as an example, the West was responsible for R&D technology, and China carried out large-scale manufacturing, enabling the whole world to reduce costs and benefit together. However, now this model is changing. Geopolitical factors and industrial competition have made countries increasingly emphasize "security" and "independence". The United States has picked up the tariff stick again, Europe is seeking the return of industries, and emerging economies such as India also want to support their domestic enterprises... All these measures indicate a trend: The global industrial chain is changing from a high degree of integration to moderate fragmentation, and from simply pursuing the lowest cost to taking supply security into account. The dramatic changes in the photovoltaic industry are one of the epitomes of this macro trend. At this new turning point, China's manufacturing industry is facing unprecedented challenges. Once upon a time, as long as our products were cheap enough and of high quality, they could freely enter the global market. But now, even photovoltaic components that are both good and inexpensive may be rejected by some markets. This warns us that the traditional development model of being the "world's factory" is no longer sustainable, and we must accelerate industrial upgrading and diversify market layouts. Fortunately, China's photovoltaic industry is not without a way out. With the technological and scale advantages accumulated in the past, we still hold an important position in the global photovoltaic field. At the same time, the development of emerging markets and the general trend of new energy transformation mean that market demand will not disappear, but only the flow direction of demand has changed. Chinese enterprises can completely participate in the new localized supply chain by investing in factories overseas and exporting technology, and continue to lead the development of the global photovoltaic industry in a new role. More importantly, the pace of innovation cannot stop. When low prices are no longer the key to opening up the market, scientific and technological progress will become a powerful weapon to break through the blockade. From PERC to TOPCon and then to heterojunction, China's photovoltaic technology has led industry changes several times, improving product efficiency and reducing costs, winning the initiative for its own development. In the future, in fields such as energy storage integration, new materials, and power services, we also have the opportunity to explore new development tracks and build a new competitive landscape. As long as we can continuously maintain the ability to innovate and transform in the new industrial era, we don't have to worry about not having a way out. "It's not that the photovoltaic industry is being sanctioned, but an industrial era is turning a new page." This view profoundly reveals the essence: The game between China and the United States in the photovoltaic field actually announces the end of the old era and the beginning of a new era. The old era was the rise of Chinese manufacturing under the dividends of globalization; the new era is an era full of uncertainties in strategic competition and industrial reshaping. The Chinese photovoltaic industry, which is in the middle of it, is destined to experience pain and challenges, but it also has the hope of ushering in new development opportunities after going through hardships. The wheel of history rolls forward. No matter how tariff barriers are set up, the sun will still rise as usual. And the practitioners in China's photovoltaic industry have already prepared themselves to welcome the new development dawn. The tariffs imposed by the United States are not just a number, but a dividing line. It not only cuts off the road to a certain market but also forces China's photovoltaic industry to stand at a crucial crossroads: Do we want to continue to be the "cheapest global foundry", or do we want to strive to become the leader of the industrial chain? This is not just a question faced by a single enterprise, but a proposition that the entire Chinese manufacturing industry must think about and solve in the new era. Indeed, the sun will still rise. But before the new dawn arrives, we must first go through this difficult cold winter.
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