Abstract: The Rise of the Chinese Solar Photovoltaic Industry: Firm, Government, and Global Industry

Matt Hopkins


The days of the United States, Germany, or even Japan acting as leading manufacturers of solar PV technology are seemingly long gone. The last decade has become a story of the rise of China as the new center of solar PV manufacture. We explore the conditions that have enabled China's rapid expansion into solar PV manufacture and assess its impact on global competition. Key factors have included: export-led growth, particularly to Europe; process innovation focused on crystalline-silicon rather than more advanced solar technologies; development of upstream production capabilities to facilitate vertical structures; the success of company founders and Chinese cities in appropriating massive financial returns for themselves; and substantial quantities of public finance acting as patient capital for firms during their early-stage growth and later when embattled by changing global market conditions. In addition Chinese firms, like their foreign competitors, benefit from deployed policy frameworks. They also benefit from the financial commitments of countries making investments in clean technology as a matter of environmental and economic imperative. Financial commitments take the form of R&D, manufacturing, and diffusion subsidies used to catalyze national markets that are all ultimately part of a global landscape—that is, their benefits are not exclusive to a nation's indigenous firms or captured by them alone. Questions remain as to whether China can transition from a role as a leading producer to a major innovator of Solar PV technology.