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China's PV industry boosted by government support

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NANCHANG, Dec. 21 (Xinhua) -- Measures announced by China's cabinet intended to boost the country's struggling photovoltaic (PV) sector have shown positive signs as industry stocks surged on Thursday.

PV industry-related stocks increased, with Hairun PV rising 5.89 percent to close at 6.23 yuan (about 1 U.S. dollar) per share, and Kehua Hengsheng Co., Ltd. jumping 8.85 percent at 8.80 yuan (1.4 U.S. dollars) per share.

According to a statement after an executive meeting presided over by Premier Wen Jiabao on Tuesday, structural adjustments and technological improvements in the sector will be speeded up, as well as encouraging mergers and restructuring among manufacturers to phase out outdated capacity.

Other government policies to support the sector include setting on-grid electricity prices according to local conditions and subsidizing the usage of PV-generated power. Also, paying more attention to market forces and reducing government interference in the sector.

Experts said such measures showed the government's resolution to boost the PV industry, which has been plagued by excessive capacity and obstacles in overseas expansion.

"China's PV industry has had difficulty selling products overseas due to anti-dumping probes initiated by the United States and Europe," said Tong Xingxue, chairman of LDK Solar Co., one of the world's largest manufacturers of solar wafers.

China's PV industry, with the world's largest capacity, faced a sharp decline in demand in the wake of sudden imposition of anti-dumping and anti-subsidy measures, said Zheng Lepeng, executive vice director of Guangdong's solar energy association.

Orders for China-made PV equipment this year slumped 80 percent from a year ago, according to China PV Industry Alliance. As a result, 90 percent of Chinese polysilicon makers halted production and 80 percent of solar panel producers shut production or sharply reduced output, it added.

"I think these policies will be very helpful for the domestic PV manufacturers to step out of the present predicament," Tong said, adding that "perhaps the toughest time is passing."

The moves will boost domestic demand and help the solar panel producers survive the current hardship, which is too dependent on the overseas market, according to Meng Xiangan, secretary-general of the China Renewable Energy Society.

The country's PV industry should shift to the domestic downstream power generation sector to offset their export losses, said Meng.

According to a report released by the National Energy Administration in August, China will have 21 million kilowatts of installed solar power generation capacity by 2015, six times more than currently.

Analysts also said while pledging to encourage mergers and restructuring among manufacturers to phase out outdated capacity, the government sought to tackle the excessive capacity to help rescue the struggling industry.

"In the next six to nine months, the PV industry is likely to experience a marked shrinking in total capacity," said Zhou Liqian, an analyst with Everbright Securities.

"Meanwhile, a boost from an increase in domestic demand and gradual economic recovery worldwide will drive the global PV demand to rise 10 to 15 percent in 2013," said Zhou. "The prices of PV equipment will likely to bottom out in the first half of next year."

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