Photovoltaic Industry Overcapacity Problem Research

Overcapacity, before being referred to as "duplication","excessive investment" or "excessivecompetition", has been plaguing our economy. In general, overcapacity usually occurs intraditional industries such as steel, cement. But in recent years, some of the emerging fields alsoappearovercapacity problem such as the photovoltaic industry. In the context of the world toactively develop a low carbon economy, the PV industry as a new energy has been one ofdevelopment of strategic emerging industries we will focus on. Therefore, it is very important toanalyze the overcapacity of the PV industry.In this paper, by using theknowledge of economics, industrial economics Ii will study and analyzethe photovoltaic industry’s overcapacity problem deeply.I will focus on the causes of China’s PVindustry industry’s overcapacity, and trying to find coping strategies to resolve the problem andenhance the level of development of the photovoltaic industry.I will analyze causes of the PVindustry from the three aspects. The first one is the characteristics of the PV industry as anemerging industry. Now the PV industry is basicallyat the primary stage of the life cycle. On theone hand,low barriers to entryresulted in a large number of manufacturers to enter this industry. Asa result, the capacity of PV industry has experienced rapid expansion. On the other hand,inadequate infrastructure and supporting facilitieslimit the expansion of the market demand of thePV industry.The second one is that The PV industry in China’s has strong external dependence,especially the very strong dependence on the European market.However,in recent years, due toeconomic recession many countries in Europe have cut the subsidies. As a result, the Europeanmarket demand plunged. This is the direct cause of PV industry overcapacity. The third factor isinstitutional factors of the transition period. The current taxation system and the performanceevaluation system makelocalgovernmentshaveastrongmotivationtointerveneenterprises’investment. This leads to seriousexteriorrisk costs and makestheenterprisesoverinvestment.To resolve the problem of the PV industry in china, on one hand,we should take measures toexpand the market of the PV industry, such as improvement of infrastructure. On the other hand,reforming the fiscal and taxation systems and governmentofficial political promotion, it is toreduce strong motivation of local government to interferencein business investment and curb theblind expansion of photovoltaic capacity.