OPIS Insights

China’s solar photovoltaic (PV) manufacturers are facing a turbulent period. The industry’s massive expansion in production capacity has collided with a slowdown in global demand, triggering a brutal price war. As a result, in the first half of 2025, six leading Chinese solar manufacturers reported combined losses of €2.42 billion ($2.8 billion), reversing years of record profits, according to financial information provider Wind.

In the meantime, Beijing has intervened, urging manufacturers to comply with competition laws, maintain quality standards, and align PV production and intellectual property practices. However, change has proven challenging.

In Europe, concerns about energy security and geopolitical vulnerabilities are intensifying as the bloc seeks to increase its installed solar PV capacity to nearly 600 gigawatts (GW) by 2030, one of the targets in its Green Deal Plan. As of mid-2025, the EU’s installed PV capacity has reached approximately 338 GW; the continent is fully on track to reach its ambitious goals, according to energy analyst Ember.

However, the European Union depends heavily on imported solar panels, cells, and critical PV raw materials, particularly from China and Southeast Asia. In 2024, Europe imported approximately 83 GW of PV modules from China and by the first quarter of 2025, Europe imports totaled 21.53 GW, according to analyst reports. China remains the dominant supplier, and approximately 40% of its total solar module exports went to Europe in the first half of 2025.

On July 24, European Commission’s President Ursula von der Leyen visited China to discuss, among other political issues, trade relations and decarbonization efforts. In her opening speech, she noted that EU-China relations are at an ‘inflection point’ and stressed the need to address trade imbalances and other challenges. Her statement also reflects Europe’s ongoing concerns about economic vulnerabilities amid its ambitious solar PV expansion.

To shed light on the solar challenges facing both regions, OPIS editor Benita Dreesen spoke with Architect Massimo Bagnasco, CEO of China Europe Carbon Neutral Technology (Chengdu) Co., Ltd. about the current state of the Chinese and European PV sectors.

OPIS: How is the Chinese solar sector doing?

BAGNASCO: The Chinese renewable energy sector, particularly PV, is experiencing significant structural challenges. While Chinese authorities avoid the term ‘overcapacity’, preferring ‘irrational competition’, which is anyhow unsustainable, the sector continues to produce more solar cells and panels than the market can absorb, both domestically and internationally.

Recent financial results from leading PV companies indicate sustained losses, continuing trends observed in 2024, with little improvement expected in the second half of 2025.

OPIS: What about Chinese internal demand for PV?

BAGNASCO: Market demand in China is slightly weaker in 2025, but the core issue is the mismatch between production and demand. We see a clear trend to supply and sell to other regions. Excess PV production is increasingly being redirected through Southeast Asian markets to reach final buyers abroad, mainly in Europe.

OPIS: What is the current state of trade between China and Europe?

BAGNASCO: China is concerned about the growing trade imbalance with Europe. While overall trade is rising, the EU’s imports of Chinese products are increasing faster than China’s purchases from the EU. This widening deficit was a key topic at the EU-China summit in July.

OPIS: What about PV trade specifically?

BAGNASCO: Chinese investments in the EU, in any sector, are welcome if they bring advanced technology, create jobs, and generate tax revenue. Currently, there are few investments in PV factories in Europe, and they are mainly in assembly plants, with key components still imported from China.

In addition, China also imposes restrictions on technology transfers in several sectors, which has helped it maintain a competitive edge in the new energy industry. This means that Europe remains dependent on Chinese suppliers for high-efficiency PV cells, components and rare earth materials.

OPIS: What is China government doing to resolve?

BAGNASCO: The situation is complex. It’s not a matter which can be easily and quickly solved, we should give China some time, as structural issues in PV production are difficult to resolve and will require production optimization and, most likely, cuts. At the same time, companies producing PV panels below cost create unhealthy market conditions.

Some government action has been taken, but it needs to be stronger and more focused on stimulating domestic PV consumption, and rebalancing demand and production capacity, rather than further expanding manufacturing. China is very skilled at managing this, but efforts need to be more substantial.