ANALYSIS: Suntech a local dilemma in China

There is a twisted irony in the reaction that would swiftly follow were Suntech to receive some sort of bail-out from the local government in Wuxi – a rescue which appears more a matter of ‘when’ than ‘if'.

Western PV manufacturers and media alike would slam “Beijing” for once again rushing in to prop up an ailing solar champion.

Rather than exposing any grand conspiracy, however, a Suntech bail-out would highlight the tension among the various levels of Chinese government. For while the full bankruptcy and liquidation of Suntech would cause numerous headaches in Jiangsu province, it may cure them in Beijing.

To be sure, it would be painful for even the most hard-nosed, pragmatic Chinese official to watch the public disintegration of a company like Suntech.

As wind-turbine giants like Sinovel and Goldwind were struggling to break out of the domestic Chinese market in recent years, Suntech seemingly effortlessly became the world’s largest supplier of PV modules – and the most visible face of Chinese renewables on the global stage.

Yet it is not difficult to see how, for China as a whole, a Suntech bankruptcy might solve problems abroad while also paving the way for a healthier renewables industry at home.

The most obvious place to look is Brussels, where European officials are weighing the merits of allegations brought by SolarWorld and others regarding illegal subsidies at home for Chinese PV manufacturers.

Many industry sources already believe Europe will let China largely off the hook, if for no other reason than export-focused Germany will be loath to start a trade war with such a critical market.

But how much easier would that decision become were Suntech allowed to sink beneath the waves?

A Suntech bankruptcy would also set a precedent that no Chinese solar company, no matter how large or politically well connected, is too big to fail. If adhered to, that principle would lead to fewer, healthier and more differentiated renewables manufacturers – a positive outcome for investors, the environment, and ultimately for China’s renewables industry.

Unfortunately, the chances of this happening appear tiny. A far more likely scenario is that the Wuxi government – desperate to preserve local jobs and avoid social unrest – will stick it to foreign investors and create a new, state-backed version of Suntech.

No one, immediate competitors aside, should be happy about the demise of Suntech. It has played a hugely important role within the global PV industry over the past five years, and it, as much or more than any company, deserves credit for how competitive solar energy has become. 

Should Suntech receive a bail-out from the Wuxi government, China will come under fire for its interventionist ways. But the PV sector may yet find itself wishing Beijing involved itself more deeply in this matter.