China's Solar PV Manufacturing and Subsidies from the Perspective of State Capitalism

Abstract

This article examines how the Chinese government, at both central and local levels, has supported solar PV equipment manufacturing to increase its share in the global market, despite its innate disadvantages in this industry. Much of China's early expansion of manufacturing sectors can be attributed to its competitive advantages in cheap labour and good infrastructure, as well as the alleged undervaluation of the Chinese currency. However, China's formidable progress in the capital-intensive solar PV industries, where these advantages were no longer functioning effectively, has raised interesting questions about hidden stimulus factors like direct government subsidies, cheap land, technology support and easy credit provided by the government or other state sectors, like state-owned banks and research institutes. China's emergence as the world's largest manufacturer in these nascent industries has global economic repercussions. This research aims to explicate the Chinese business model from the perspective of state capitalism, a quasi-market system that has been integrated into the global economy, but which remains under the command of an authoritarian regime with a central planning mindset that makes innovative use of domestic leverages to subsidize strategic industries and achieve international competitiveness