China's solar industry is undergoing a significant correction, which a lobby group has described as a "return to rationalization." This downturn is evidenced by a 16.5% drop in solar cell export volume in June compared to the previous year, following a surge earlier in 2026. This slump in exports, marking the second consecutive monthly decline, indicates weakening overseas demand for Chinese solar products. The General Administration of Customs released this data, highlighting a struggling export market.
Domestically, the outlook is also bleak. The China Photovoltaic Industry Association projects a massive decrease in new installations for 2026, with an expected range of 180 to 240 gigawatts. This is a dramatic fall from the record 315 gigawatts installed in 2025. This sharp reduction is attributed to a policy shift introduced last year that has impacted revenue from renewable energy generation, as well as an oversupply situation in the industry leading to plummeting module prices from approximately RMB 4/watt to RMB 0.6/watt ($0.08).
Financial struggles are widespread among major Chinese photovoltaic (PV) companies. For the first half of 2026, leading players have reported combined deficits exceeding RMB 10 billion. For instance, Tongwei, a major polysilicon and cell producer, anticipates a net loss of RMB 4.8-5.4 billion ($0.7-0.79 billion). LONGi Green, a key player in wafers and modules, projects a net loss of RMB 3.4-3.8 billion, blaming persistent supply-demand imbalances and limited grid absorption capacity. JA Solar expects a net loss of RMB 2.4-2.9 billion, partly due to increased tax burdens from the removal of export VAT rebates and global trade barriers.
Contributing to these financial woes are low operating rates, compressed gross margins, and investment losses. The Chinese government is also gradually reintroducing consumption taxes on PV cells and battery products, starting September 1, 2026, with a 2% rate on PV cells taking effect April 1, 2027. This move, following new mandatory national standards for energy consumption and efficiency, is intended to address the acute oversupply in the PV module industry. However, certain emerging technologies like perovskite and gallium arsenide PV cells will retain tax exemptions until December 31, 2028, to support innovation.
Despite the widespread losses, some companies show signs of recovery or resilience. TCL Zhonghuan expects to narrow its H1 loss to RMB 3-3.3 billion year-on-year, with improved Q2 performance driven by reduced non-silicon wafer costs, increased shipments of high-efficiency products, and quadrupled overseas module shipments. Trina Solar also projects a significantly narrowed net loss of RMB 180-360 million for H1, a substantial improvement from a $2.92 billion loss in the same period last year, and might even reach quarterly break-even in Q2.
