The Impact Of Government Intervention On Photovoltaic Industry Overcapacity

The 14 th Five-Year Plan for National Economic and Social Development calls for developing and strengthening strategic emerging industries,with their added value accounting for more than 17% of GDP.The photovoltaic industry belongs to the new energy industry and it is one of the strategic emerging industries supported by our country.The advantages of photovoltaic power generation in renewable energy are mainly due to its safety,harmlessness,noise-free,and relatively simple operation and maintenance.However,it can’t be ignored that the rapidly developing photovoltaic industry is facing the dilemma of excess capacity.Compared with wind power industry and other industries,China’s solar PV industry has a more prominent problem of overcapacity.The academic community generally believes that in addition to economic cyclical factors,another important cause of overcapacity in the photovoltaic industry is the improper intervention by local governments.This dissertation aims to discuss the influence of government intervention on overcapacity in photovoltaic industry,elaborates the influence of government subsidies,tax incentives,financial support and land support on excess capacity in the photovoltaic industry,and carries out empirical research on the basis of theoretical analysis.First,the capacity utilization rate of China’s photovoltaic industry from 2011 to 2019 is calculated by the production function method and the standard error method of panel correction.Then,the impacts of government subsidies,tax incentives,financial support and land support on the PV industry as a whole,as well as the upstream,midstream and downstream overcapacity are analyzed respectively,by using the least square method and the GMM method.Finally,the short-term and long-term implementation effects of the policy “Several Suggestions on Promoting the Healthy Development of the Photovoltaic Industry”(hereinafter referred to as Suggestions)issued by Chinese government in 2013 are tested.The results show that: First,during the research period,China’s photovoltaic industry is in the stage of diminishing returns to scale and still relies heavily on labor input.Most enterprises are clustered at the bottom of the value chain,and the improvement of economic efficiency depends on technological progress.The capacity utilization rate of China’s photovoltaic industry is generally low.Second,from 2011 to2019,the increasing intensity of government intervention has exacerbated the overcapacity in the photovoltaic industry.Government subsidies have the largest positive impact in promoting overcapacity,followed by tax incentives and land support.For the three parts of the PV industry chain,namely upstream,midstream and downstream,government subsidies,land support and tax incentives all play an important role in promoting overcapacity in each part.The increase of financial support has aggravated the excess capacity in midstream.Third,the short-term effect of the Suggestions is not ideal.However,in the long run,Suggestions will promote the healthy development of the photovoltaic industry,and it will take a long time to correct the government intervention’s positive effect on overcapacity.Based on the above research conclusions,this paper puts forward several targeted policy suggestions,including avoiding improper intervention of local government,deepening market-oriented reform of factors,adjusting the performance appraisal system of local officials,vigorously expanding domestic market demand and improving the innovation environment.