China's Photovoltaic Industry's Anti-Involutionary Campaign

The Chinese photovoltaic industry is experiencing a period of pain caused by overcapacity, and recent intensive industry collaboration signals a growing resolve across the industry chain to combat this "involutionary" situation.

On July 29th, the China Photovoltaic Industry Association (CPIA) issued a statement refuting rumors, directly addressing the core contradiction in the current market: irrational low-price competition, which has created a vicious cycle where "bad money drives out good money." The statement explicitly denied the false rumor that the industry would condone low-price dumping and emphasized that it would maintain market-based pricing order through three major measures:

• Establish a price monitoring mechanism
• Promote corporate self-discipline agreements
• Cooperate with regulatory authorities to investigate and crack down on unfair competition

According to sources close to the association, some companies, in an effort to gain market share, pushed module prices below the cost line of 0.58 yuan/W (approximately $0.081/W), causing the industry's per-watt profit margin to fall below 1%. This "suicidal competition" has caused collective alarm among leading companies.

The prelude to this action began with a closed-door supply chain seminar on July 24th. Leaders from over 20 leading companies, including Longi, JinkoSolar, and Trina Solar, gathered and disclosed shocking data:

Global effective PV module production capacity will exceed 800GW by 2025.

Annual demand is only approximately 580GW, with over 30% of capacity remaining in excess.

In the first quarter, the industry as a whole experienced a 62% loss, and some second-tier companies faced a sharp increase in the risk of cash flow disruption.

An executive from a participating company stated bluntly, "Now is not the time to grab market share; it's about ensuring the survival of the industry." The meeting ultimately reached three consensuses:

• Resist selling below cost
• Jointly establish a production capacity early warning system
• Promote technology premiums instead of price competition

Changes in price signals have become a crucial window into the industry's ecological restoration. Guojin Securities' New Energy Team noted:

Polysilicon prices bottomed out and rebounded in June, rising from 38,000 yuan/ton (approximately $5,300/ton) to 45,000 yuan/ton (approximately $6,300/ton), driving cost recovery in the wafer and cell segments.

Calculations show that if the tax-inclusive module price rises to 0.81 yuan/W (approximately $0.113/W), leading companies' net profit per watt could return to a safe range above 0.05 yuan (approximately $0.007).

The current market is clearly differentiated:

This price differentiation confirms the feasibility of a "technological breakthrough."

Industry experts analyze that the key to combating internal involution lies in breaking the path dependency of "trading price for volume." The China Photovoltaic Industry Association is currently drafting the "Photovoltaic Industry Fair Competition and Self-Discipline Convention," which proposes establishing a "blacklist" system for companies selling below cost and collaborating with tax and market regulatory authorities to verify the compliance of low-price transactions. A legal affairs director at a photovoltaic company revealed that three companies have been suspended from bidding for large-scale national photovoltaic base projects due to "false quotations and malicious order grabbing."

This ecosystem reconstruction still faces multiple challenges:

• Small and medium-sized manufacturers may continue to sell goods at low prices to reduce inventory.
• Some overseas buyers are using price wars to drive down prices.
• The cost of equipment upgrades brought about by technological advancements is putting pressure on companies.

However, most practitioners believe that short-term pain will be rewarded with long-term health. Only when prices return to a reasonable range will companies be motivated to invest in the research and development of next-generation technologies such as BC and perovskite. This is the necessary path for the Chinese photovoltaic industry to move from "scale first" to "quality first."