China's solar slump to strengthen sector?

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BEIJING, Oct. 8 (UPI) -- While China's solar slump has serious repercussions, it could result in a stronger solar sector, insiders say.

Prices of solar panels have fallen to three-quarters of their 2008 prices. As a result, China's major solar panel makers are suffering losses of up to $1 for every $3 of sales this year, says a report in The New York Times.

Last week, China's Suntech received a delisting warning from the New York Stock Exchange, China Daily reports, while other Chinese companies such as LDK Solar seem to sliding toward bankruptcy.

"For the leading companies in the sector, if they're not careful, the whole sector will disappear," Chen Huiqing, the deputy director for solar products at the China Chamber of Commerce for Import and Export of Machinery and Electronic Products was quoted as saying by the Times.

Buoyed by state subsidies, China's manufacturing capacity has exceeded world demand.

Shen Hongwen of Chinese market research firm CI Consulting says China's production capacity for solar cells has swelled to more than 40 gigawatts a year, while estimates for the global PV demand for this year hover around 30 gigawatts.

Chinese solar company executives typically attribute the market slump to the Obama administration's imposition of anti-dumping and anti-subsidy tariffs on solar panel imports and the European Union's decision last month to start its own anti-dumping investigation.

But Yingli Solar founder and chairman Miao Liansheng also cites the eurozone crisis as well as U.S. presidential elections and the transfer of political power in many countries.

Despite market turbulence, the Yingli chief said he sees a bright future for China's solar sector.

"It is ultimately a question of hanging on till the tide turns. I am confident that the companies that can do so will emerge as winners in the long run," he told China Daily.

As early as the end of 2013, Miao said, the sector will bounce back from its worst period.

Miao says he has no plans to slow production or lay off workers at Yingli despite the sharp erosion in profit margins and he stands firm on his goal to nearly double the company's production capacity to 4 gigawatts by 2014.

However, Yingli plans to shift its focus from the European market and instead target separately the euro zone, the dollar zone and the yuan zone.

Meng Xiangan, deputy director of the China Renewable Energy Society, acknowledges that Chinese solar companies will take a beating once the higher tariff is in place.

"But on the other hand, the severe market downturn will push them to produce better and more competitive products that will make solar energy a truly affordable and clean energy for the future."