Seeking to end a damaging supply glut, Chinese solar giants plan a multibillion-yuan fund to cut polysilicon capacity.
Chinese solar companies, including GCL Technology, are in talks to establish a 50 billion yuan ($7 billion) restructuring fund aimed at buying and shutting down over one million tonnes of polysilicon production capacity.
The move seeks to address a severe supply glut and support President Xi Jinping’s push to end destructive price wars and industrial overcapacity.
China’s total polysilicon production capacity stood at 3.23 million tonnes at the end of 2024, around twice the country’s projected demand for 2025, according to the China Photovoltaic Industry Association. The oversupply has caused significant industry distress, with more than 40 solar companies delisting or going bankrupt since last year. Even major producers such as Tongwei have been hit, cutting around 87,000 jobs, which is roughly a third of their workforce.
If implemented effectively, the proposed fund could serve as a market-oriented tool to remove excess capacity, potentially easing trade tensions with the US and Europe. It could also become a model for other sectors struggling with overcapacity, such as the automotive industry.
However, the plan faces major obstacles. Local governments may resist winding down investments in a sector that was previously considered strategically important. In addition, collaboration from banks and state-backed enterprises, many of which are wary of an industry plagued by heavy losses, will be critical.
In 2012, a global glut and US anti-dumping duties triggered widespread bankruptcies, a fate industry leaders are now seeking to avoid through coordinated capacity cuts.
