Recently, rumors of price increases have continued to circulate in the photovoltaic industry.

It is rumored that several leading component manufacturers have clearly signaled price adjustments, and the market generally expects the price increase to be in the range of 0.02-0.04 yuan/W.

In fact, judging from the price trend, there have been significant changes in each link of the industry chain since November. As of November 2025, the average prices of polysilicon, silicon wafers, solar cells and modules have increased by 38.9%, 2.2%, 0.4% and 2.3% respectively compared with the beginning of the year.

In December, the photovoltaic industry took another substantial step in its "self-rescue" efforts.

Beijing Guanghe Qiancheng Technology Co., Ltd., jointly established by nine leading polysilicon companies including Tongwei and GCL and the China Photovoltaic Industry Association, was officially registered on December 9, marking the final launch of the polysilicon storage platform that had been in the works for nearly half a year.

Rewind to March 27, 2024, when then-US Treasury Secretary Janet Yellen, while attending an event at a solar cell factory in Georgia, stated: "China's 'overcapacity' in the green energy industry poses a threat to the global supply chain and related US industries."

During her subsequent visit to China in April, Yellen continued to assert that China's three major green energy-related industries —new energy vehicles , photovoltaics , and lithium batteries— faced "overcapacity" problems. In November, the G7 again hyped up the "China overcapacity theory," prompting a rebuttal from the Ministry of Foreign Affairs.

"The so-called 'overcapacity in China' has been proven to be a false proposition by a wealth of detailed facts and data. We hope that relevant countries will maintain an open mind and adhere to fair competition."

So, does China's photovoltaic industry actually have an overcapacity problem? What is the root cause of the so-called "involution"?

In early economics literature, overcapacity was generally referred to as excess capacity, a concept first proposed by Chamberlin in his 1933 book, *Monopolistic Competition*.

The discussion of overproduction in domestic policy circles originated from the 1997 East Asian financial crisis, when external demand dropped sharply , the operating rate of domestic enterprises was seriously insufficient, and a considerable number of export-oriented enterprises went bankrupt, resulting in a large number of employees leaving their jobs and becoming unemployed.

In response to the "overproduction" phenomenon in 1998, the country adopted a strategic approach of using government bond investment to stimulate economic growth. As a result, investment in major infrastructure projects such as railways, highways, airports, and water conservancy flourished, further laying a solid foundation for foreign investment in China and also paving the way for the recovery of state-owned enterprises, thereby boosting the economic growth rate.

In 2014, China's economy entered an L-shaped downward curve. The following year, the country decisively proposed supply-side structural reform in industry , advocating for reducing overcapacity and inventory .

In this light, the problems encountered ten or even twenty years ago are no different from the current situation.

Over the past decade, the country has vigorously promoted major strategies such as the Belt and Road Initiative , poverty alleviation , and rural revitalization , which are essentially aimed at addressing the problem of "overproduction." In this context, "overproduction" is not an absolutely negative term, but rather has become a driving force for regional development.

However, over the past decade, industrial supply-side reforms have not been effectively implemented, and in this new cycle, "overproduction" has evolved into a global phenomenon. Why?

Professor Wen Tiejun argues that the 2016 real estate boom, to some extent, "hindered" the pace of supply-side reforms, as excess capacity was absorbed by the real estate sector, which could drive thousands of related industries. The financialization of real estate capital further depleted future consumption. After the bubble burst, the existing "overproduction" in China, coupled with the squeeze on residents' investment and consumption levels, deepened the contradictions.

Therefore, the so-called "overcapacity" in the photovoltaic industry is almost inevitable and cannot be controlled by photovoltaic companies, even the leading photovoltaic companies.

They too were swept up in the tide of the times, trapped in a vicious cycle of "expansion-loss-re-expansion".

And this is just one of the challenges we face domestically. In fact, the biggest fear regarding production capacity is not overproduction, but underproduction.

Therefore, as globalization gradually disintegrates, we should be clear that the trade barriers established by the United States and other Western countries will not change due to changes in political parties, and the vicious competition of industrial capital has begun to recur .

The difference lies in the fact that after World War II, the outflow of industrial capital from Western countries led to globalization, which in turn caused their countries to enter a stage of underproduction. Developing countries, on the other hand, benefited from the progress of their industrialization and thus experienced a phenomenon of "overproduction."

For developing countries, this vicious competition among industrial capital is unlikely to evolve into "launching a war against developed countries," and objectively it evolves into the phenomenon of "involution."

In the photovoltaic industry, this structural imbalance is particularly severe in terms of price: the price of photovoltaic modules fell from 2 yuan/W to 0.86 yuan/W at the end of 2024, breaking through the cost line for the vast majority of companies.

On the other hand, this round of global "overproduction" crisis has also presented an unprecedented complex situation in the photovoltaic field: local governments' blind pursuit of the "new three items," the speed of technological iteration far exceeding the capacity clearing cycle, a 380% surge in photovoltaic patent litigation cases in the past year, and continuously rising tariffs in Europe and the United States...

Since the trade war began in 2018, my country has prioritized a domestic-oriented economic cycle. However, the current model of using industrialization and urbanization to drive high economic growth and absorb excess capacity is no longer viable. So, where does China's photovoltaic industry's capacity absorption strategy lie?

Seven years ago, the International Energy Agency released the World Energy Outlook 2018 report, which pointed out that global energy demand growth will exceed one-quarter by 2040, photovoltaic installed capacity will surpass wind power in 2025 , surpass hydropower around 2030 , and surpass coal power before 2040 , ranking second in global installed capacity only after natural gas.

In the same year, the British Group released the "International Energy Outlook 2018", predicting that by 2040, photovoltaic power generation will account for 12% of the world's total power generation, with an annual growth rate of more than 10%.

During the 2025 Two Sessions, 13 delegates and members offered suggestions for the development of the photovoltaic industry. Frequently used terms included, but were not limited to: going global, internationalization, technological innovation, and patent protection, reflecting an anxiety about the depletion of the existing market.

Currently, the targeted measures adopted by the government have evolved from investing in infrastructure and promoting supply-side reforms to accelerating the formation of "new quality productivity." Photovoltaics, as an industry inherently possessing green attributes, naturally serves as an excellent shield against the current complex economic situation in China.

In early 2025, a document jointly issued by the National Development and Reform Commission and the National Energy Administration, entitled "Notice on Deepening the Market-Oriented Reform of New Energy On-Grid Electricity Prices to Promote High-Quality Development of New Energy" (NDRC Price [2025] No. 136), stirred up ripples in China's photovoltaic industry like a stone thrown into a calm lake.

This document, known as "Document No. 136," brought about the "531 rush to install," which caused China's total photovoltaic installation capacity to rapidly exceed 1TW, indirectly driving up module prices and, to some extent, successfully bringing about a "phased recovery" for the industry, which was in the midst of a severe downturn.

Over the past decade, the significant decrease in the cost of photovoltaic power generation has laid the foundation for its full participation in market competition.

This fundamental rule change, like an invisible hand, is powerfully reshaping the investment logic and operational paradigm of industrial and commercial photovoltaic power plants.

On the other hand, the national strategy clearly points to the "Belt and Road" initiative and rural revitalization, which are precisely the areas where photovoltaics has an advantage among the "new three pillars." Combined with the demand generated by power reform under a unified national market, photovoltaics is not a story of disappointment, but rather an epic tale of a great industry weathering storms.

Let's give photovoltaics time.