Research On The Impact Of Government Subsidies On The Overcapacity Of The Photovoltaic Industry

For a long time,overcapacity has been a major problem that restricts the high-quality development of China’s economy.The problem of overcapacity in the past mostly occurred in steel,cement,electrolytic aluminum and other traditional industries.However,in recent years,the problem of overcapacity in emerging industries such as photovoltaic has become prominent,especially the bankruptcy crisis of leading photovoltaic enterprises such as Suntech Wuxi and Suntech Jiangxi.In the context of accelerating the construction of a new development pattern,it is of great practical significance to analyze the problem of overcapacity and its formation mechanism in the photovoltaic industry.Based on the perspective of both sides of supply and demand,this paper uses the data of 109 photovoltaic enterprises listed in Shanghai and Shenzhen stock markets from 2008 to 2019 to calculate potential capacity by using the translogarithmic cost function,calculate the capacity utilization rate of supply side and demand side respectively,and empirically test the impact of government subsidies on the capacity utilization rate of photovoltaic industry.This paper combines theoretical analysis and empirical test to do the following aspects of work.Firstly,the connotation,measurement methods and causes of overcapacity are sorted out,and the formation mechanism of the influence of government subsidies on overcapacity in photovoltaic industry is discussed.Under the dual influence of the fiscal decentralization system and the political promotion tournament of government officials,the competitive subsidies for investment seriously distort the capacity investment behavior of enterprises,provide living space for the inefficient enterprises,and lead to the failure of market competition mechanisms,which in turn leads to the problem of overcapacity of unbalanced supply and demand in the industry.Secondly,use panel data to measure the capacity utilization rate on both sides of the supply and demand of photovoltaic industry,and construct an econometric model to empirically test the impact of government subsidies on the capacity utilization rate of photovoltaic industry.It is found that there is overcapacity in China’s photovoltaic industry as a whole,mainly on the supply side.Comprehensive capacity utilization ranged from 23% to 67%,with the lowest in 2009 and the highest in 2017.Government subsidies have a significant negative impact on the photovoltaic industry’s capacity utilization rate,while the negative impact on the supply side of the capacity utilization rate is greater.The above conclusions were still valid after a series of robustness tests and endogeneity tests.Heterogeneity analysis shows that government subsidies have a greater negative impact on overcapacity in SOEs and smaller enterprises.Mechanism analysis found that government subsidies distorted the allocation of resources,blindly expanded the investment behavior of enterprises,and then led to overcapacity.Finally,according to the above research results,the following policy recommendations are put forward.Raise the technical threshold of government subsidies and give play to the effectiveness of industrial policies;Actively develop the domestic market to solve the problem of excess capacity on the demand side;Provide a competitive neutral market environment,so that enterprises of different ownership and different sizes can share the policy dividends fairly;Upgrade industrial policy and reduce investment distortions caused by government subsidies.