China planning significant overhaul of solar panel indsutry

China is currently in the midst of an ambitious, government-backed five-year plan to develop more clean energy resources, and now the government is looking to overhaul its solar panel industry to fix some notable weaknesses.

In recent years, the country’s solar panel providers have suffered some major losses due to price wars and excessive production. China’s new plan will seek to encourage mergers and will also block local leaders from supporting domestic producers — some of those producers may be allowed to go bankrupt as the industry stabilizes. The country’s governement has spent much of the last decade encouraging the industry’s expansion by offering a variety of grants and loans, but now hundreds of small producers have flooded the market with an overabundance of panels, leading to a price-cutting war.

This news comes shortly after the US imposed tariffs ranging from 24 to 36 percent on solar panels imported from China. These tariffs are a result of a US Commerce Department investigation after a contention that Chinese companies were unfairly competing in the American market . Despite the accusations of unfair competition, China’s solar panel market has struggled, with reported debts of $17.5 billion accumulating over the last few years. Despite the recent turbulence, it’s still a very important part of China’s energy strategy going forward — the country is planning to have clean energy account for 20 percent of its energy production by 2020, with solar power expected to play a major role in that transition.