China's new draft legislation seeks to deal with solar panel glut

China’s Ministry of Industry and Information Technology (MIIT) on Tuesday launched the public consultation period for a draft regulation that seeks to limit the excessive expansion of the country’s solar manufacturing capacities.

The document sets out that local solar companies should refrain from establishing new photovoltaic (PV) production facilities simply for the sake of boosting capacity and instead focus on bolstering technological innovation, improving product quality, and cutting production costs.

Furthermore, it increases the minimum capital ratio for both new construction and expansion projects to 30%. The prior minimum capital ratio was set at 30% for polysilicon production and 20% for other PV projects, Reuters reported.

According to the document, MITT’s goal with the new regulations is to beef up the management of the industry. Another new rule requires sector players to spend at least CNY 10 million (USD 1.4m/EUR 1.3m), and not less than 3% of total sales, on research and development (R&D) and process improvement.

Those who would like to make comments or suggestions with regard to the draft regulation have time until July 15, 2024.

(CNY 10 = USD 0.138/EUR 0.127)

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