**Abstract**
From the end of 2012 to December 2013, in an effort to revitalize the domestic photovoltaic (PV) industry, the Chinese government introduced a series of policies, including "Several Opinions on Promoting the Healthy Development of the Photovoltaic Industry" and "Opinions on Supporting Distributed Photovoltaic Power Generation Financial Services." Additionally, the "Notice on the Interim Measures for the Management of Distributed Photovoltaic Power Generation Projects" was also issued. These policies were seen as a strong signal of the government's commitment to the sector. However, while the policy framework appeared comprehensive, its implementation often fell short, leading to criticism that some measures were more symbolic than practical.
**Policy Financing is Too “Loveâ€**
As a strategic emerging industry, the PV sector has long relied on government support during its early development stages. The government introduced subsidies and operational guidelines, aiming to ease financing challenges for PV companies. This approach, often referred to as “nanny-style†support, was seen as excessive. With China being the world’s second-largest economy and possessing significant capital strength, the PV industry had already grown rapidly, with many private players entering the market. The government’s continued involvement in financing, especially after 2013, raised concerns about overreach. Such intervention could discourage private capital and reduce the enthusiasm of commercial banks, which may feel pressured to offer favorable terms without clear returns.
In theory, if the policy environment is sound, private capital would naturally be attracted to the PV sector. However, when the government intervenes by forcing banks to extend loan periods or lower interest rates, it risks creating uncertainty. This kind of policy-driven approach can undermine market mechanisms and lead to unintended consequences, such as financial instability for banks. The case of Shanghai Bank highlights how this can happen.
Moreover, the government cannot indefinitely meet the demands of enterprises. Companies need clear and sustainable support, not just temporary relief. If the government continues to provide excessive aid, it may weaken the competitiveness of PV firms and distort market dynamics. It could also discourage innovation and self-reliance among private enterprises.
Another critical issue is that China’s PV subsidy policy has become a point of contention in international trade. European and American countries have imposed countervailing duties on Chinese PV products, partly due to these subsidies. As a major exporter to the EU and the U.S., the Chinese PV industry faces a double challenge: domestic support and foreign tariffs. This situation has created a dilemma where companies are caught between government backing and international pressure.
**The Policy Is Very Full, But the Reality Is Very Thin**
Many policies appear promising on paper, but their real-world impact is often limited. For example, the push for distributed PV was accompanied by multiple supportive measures, including the establishment of demonstration zones and financial service guidelines. Despite this, actual progress has been slow. Four months after the announcement, very little had changed, raising doubts about the feasibility of the targets set for 2014.
One of the key goals was to build 12 GW of PV projects in 2014, with 8 GW allocated to distributed systems. Industry experts, however, questioned whether this target was realistic. Some jokingly suggested that the numbers should be reversed, with more ground-mounted projects and fewer distributed ones. The lack of clarity in implementation, combined with limited participation from private developers, has made it difficult to meet these ambitious goals.
State-owned enterprises currently dominate the distributed PV landscape, making it hard for smaller, private players to enter. According to Meng Xianyu, vice chairman of the China Renewable Energy Society, private companies face significant financing challenges under the current policy framework. This imbalance has contributed to the sluggish development of distributed PV.
Additionally, the low financial incentive for small-scale PV projects makes them less attractive. While some savings can be achieved, the risks involved—such as potential damage to the system or grid connection issues—discourage widespread adoption. Although the State Grid has promised support, past experiences have made developers skeptical about the reliability of the infrastructure.
Today, distributed PV faces multiple hurdles, including access to financing, roof space, and grid integration. These issues are complex and take time to resolve, even with well-designed policies. Without proper execution, even the best policies remain ineffective.
Ultimately, the goal of government policy is to drive industry growth, but without effective implementation, all efforts may amount to nothing more than paperwork. In recent years, the number and quality of policies have increased, yet the recovery of the PV industry still feels rushed. Over the past decade, the industry has developed rapidly but remains unstable, with hidden risks. The 2012 crisis serves as a reminder of the dangers of overcapacity and blind investment driven by policy incentives. Therefore, the government must carefully consider future policies, learning from global practices and tailoring them to fit China’s unique conditions. A truly effective PV policy must be rooted in reality and designed with sustainability in mind.
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