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Cake day: January 29th, 2025

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  • You’re implying it was the government’s intent rather than incompetence?

    I wouldn’t say incompetence in that there are many excellent experts in China who perfectly know -and always knew- a better way forward. The problem imo is that they have nothing to say, and everyone who dares to express an even slightly different opinion than the central government risks to get in big trouble.

    As an example: Because China wants to achieve its planned GDP growth, political leaders in the provinces are given ‘targets’ by the central government for their regional output. To reach this target (and secure their political careers?), they build coal plants and other infrastructure, although they are often not needed. As regional leaders want to achieve their local GDP goals, there is also little incentive to collaborate with each other - such as in joint grid investments that would enable them to share resources. (The central government has announced it will invest in its countrywide grid some time ago, but so far nothing tangible has happened.)

    One result is excessive overcapacity in a large number (all?) sectors.


  • No. Just read the article. Most solar panels China produces sit and do nothing. Instead of investing into the domestic grid, China pursued a policy to subsidies production even as the output is not needed, neither in China nor in the world. The only thing Western countries are to blame is that they didn’t ban cheap Chinese tech already back in the 2000s (industry experts have warned about this even then).

    This problem has intentionally been “Made in China.” Something like this happens if a centralized government wants to gain control over entire supply chains while ignoring economic realities.

    China’s government has been getting a lot wrong here for a long time, and by now there seems to be no intention to correct course. There are many excellent analyses that proof this, for example, one is here:

    The explanation for China’s recent coal boom lies in a combination of policy priorities, institutional incentives and system-level mismatches, with origins in the widespread power shortages China experienced in the early 2020s.

    In 2021, a “mismatch” between the price of coal and the government-set price of coal-fired power incentivised coal-fired power plants to cut generation … China had – and still has – more than enough “dispatchable” resources to meet even the highest demand peaks. (Dispatchable sources include coal, gas, nuclear and hydropower.) It also has more than enough underutilised coal-power capacity to meet potential demand growth.

    A bigger factor behind the shortages was grid inflexibility. During both the 2020 power crisis in north-east China and the 2022 shortage in Sichuan, affected provinces continued to export electricity while experiencing local shortages.

    A lack of coordination between provinces and inflexible market mechanisms governing the “dispatch” of power plants – the instructions to adjust generation up or down – meant that existing resources could not be fully utilised … Nevertheless, with coal power plants cheap to build and quick to gain approval, many provinces saw them as a reliable way to reassure policymakers, balance local grids and support industry interests, regardless of whether the plants would end up being economically viable or frequently used …




  • China’s ‘four-year spree energy spree’ has not only eclipsed the entire US power grid. It is even worse: China’s solar industry’s capacity reached levels capable of satisfying global demand roughly twice over, according to figures from late last year.

    And this is only solar. China is also the world’s largest producer, importer, and consumer of coal. The country burns 56% of the world’s coal, has tripled consumption since 2000 and is building coal plants at the fastest pace in the last decade.

    China not only increases its coal dependence but is also building solar panels it cannot use, in part because the Chinese grid is still unfit. Issues such as curtailment, where solar energy production has to shut down due to grid limitations, have become an obstacle China hasn’t yet solved.

    As Morningstar reports,

    China’s solar-capacity factor … stood at just 14.7% in 2023, compared with 23.3% in the United States.

    And it’s getting worse. In 2024, solar capacity grew by 45% while generation increased only 28%. Do the math and the implied capacity factor drops toward 11% or 12%. IEEFA data shows utilization hours collapsed from 1,030 in 2020 to just 473 in 2024.

    That means that roughly five-sixths of the time China’s solar installations sit there doing nothing. They are the world’s most expensive decorations - a clean-energy Potemkin village stretched across the provinces.

    China is building solar capacity faster than it can use it, faster than its grid can absorb, faster than any economic logic would justify. The result is panels producing power that nobody can buy, connected to a grid that cannot handle the load.

    But the Chinese government has been up to sustain investment growth at any cost to compensate for the decline of the country’s troubled property sector and stalling domestic consumption. So China built new factories not just in solar, but also in electric cars and batteries.

    Similar as in these other industries, the policy led to fierce price wars in Chinese solar markets and to an overcapacity that is now desperately seeking its solution in export markets. But despite huge state subsidies, more than 40 Chinese solar manufacturers have already gone bankrupt or halted production since 2024. One-third of China’s 121 listed solar producers are operating at a loss with China’s top four solar manufacturers - Longi Green Energy, Jinki Solar, JA Sola, and Trina Solar - collectively lost $1.5 billion in the first half of 2025 alone.

    Chinese solar companies have already responded by laying off a third of their workers, according to a Reuters analysis of company filings.

    Yet the headline tells you of a thriving Chinese renewable energy industry.

    I could continue this for a long time, but I don’t want to overdo it. The linked reports make an excellent read, though, and you’ll find more across the web.

    Some say that exceptionally low prices help accelerate solar adoption to save the climate, but this is short-term thinking imo. In the long-term it is much better if we develop diverse suppliers working across different supply chains to reach a more stable, fast, and - above all - just energy transition.


  • China’s ‘four-year spree energy spree’ has not only eclipsed the entire US power grid. It is even worse: China’s solar industry’s capacity reached levels capable of satisfying global demand roughly twice over, according to figures from late last year.

    And this is only solar. China is also the world’s largest producer, importer, and consumer of coal. The country burns 56% of the world’s coal, has tripled consumption since 2000 and is building coal plants at the fastest pace in the last decade.

    China not only increases its coal dependence but is also building solar panels it cannot use, in part because the Chinese grid is still unfit. Issues such as curtailment, where solar energy production has to shut down due to grid limitations, have become an obstacle China hasn’t yet solved.

    As Morningstar reports,

    China’s solar-capacity factor … stood at just 14.7% in 2023, compared with 23.3% in the United States.

    And it’s getting worse. In 2024, solar capacity grew by 45% while generation increased only 28%. Do the math and the implied capacity factor drops toward 11% or 12%. IEEFA data shows utilization hours collapsed from 1,030 in 2020 to just 473 in 2024.

    That means that roughly five-sixths of the time China’s solar installations sit there doing nothing. They are the world’s most expensive decorations - a clean-energy Potemkin village stretched across the provinces.

    China is building solar capacity faster than it can use it, faster than its grid can absorb, faster than any economic logic would justify. The result is panels producing power that nobody can buy, connected to a grid that cannot handle the load.

    But the Chinese government has been up to sustain investment growth at any cost to compensate for the decline of the country’s troubled property sector and stalling domestic consumption. So China built new factories not just in solar, but also in electric cars and batteries.

    Similar as in these other industries, the policy led to fierce price wars in Chinese solar markets and to an overcapacity that is now desperately seeking its solution in export markets. But despite huge state subsidies, more than 40 Chinese solar manufacturers have already gone bankrupt or halted production since 2024. One-third of China’s 121 listed solar producers are operating at a loss with China’s top four solar manufacturers - Longi Green Energy, Jinki Solar, JA Sola, and Trina Solar - collectively lost $1.5 billion in the first half of 2025 alone.

    Chinese solar companies have already responded by laying off a third of their workers, according to a Reuters analysis of company filings.

    Yet the headline tells you of a thriving Chinese renewable energy industry.

    I could continue this for a long time, but I don’t want to overdo it. The linked reports make an excellent read, though, and you’ll find more across the web.

    Some say that exceptionally low prices help accelerate solar adoption to save the climate, but this is short-term thinking imo. In the long-term it is much better if we develop diverse suppliers working across different supply chains to reach a more stable, fast, and - above all - just energy transition.





  • This is a questionable interpretation and a highly misleading title and content.

    TL;DR: China’s export-focused economy is doing relatively well, all other sectors fall further behind. It’s another proof for Beijing’s mercantilism and its increasing dependency on foreign markets.

    China’s official manufacturing purchasing managers’ index fell back in contraction to 49.3. The fact that it diverges from the (private) RatingDog PMI provided by S&P (and cited in linked the article), suggests that external activity continues to be much stronger than domestic demand.

    In other words: China’s economy is still highly reliant on exports, it does carries over its troubles into 2026 (this interpretation is in line with several analysts, see, for example, the report by ING Bank).

    Unlike China’s official PMI, the private RatingDog PMI has a sample size focused on private and particularly export-oriented companies. We have seen that the gap between the two PMIs has been growing especially in the second half of 2025, and this gap is now even larger.

    We also see that China’s official NBS Non-Manufacturing PMI fell back into contraction to 49.4 in January 2026 from 50.2 in December 2025, reflecting cautious consumer spending and and persistent stress in the property sector.

    The consequences of China growth model are felt already by ordinary people, as one analysis reads:

    [China’s] The country’s growth has become increasingly expensive to maintain, and its dividends are reaching ordinary households with diminishing force.

    The divergence between headline growth and household reality is now impossible to ignore. While GDP expanded by 5 percent in 2025, median per capita disposable income – a more representative measure of what typical families actually earn – rose by only 4.4 percent, slowing from the 5.1 percent gain in the previous year. Urban residents fared even worse, with median income growth of just 3.7 percent – worse than the 4.6 percent growth in 2024. The slowdown may seem modest in percentage terms, but it signals something profound: the transmission mechanism that once converted aggregate growth into broadly shared prosperity is weakening. – (Archived)

    [Edit typo.]


  • This is a questionable interpretation and a highly misleading title and content.

    TL;DR: China’s export-focused economy is doing relatively well, all other sectors fall further behind. It’s another proof for Beijing’s mercantilism and its increasing dependency on foreign markets.

    China’s official manufacturing purchasing managers’ index fell back in contraction to 49.3. The fact that it diverges from the (private) RatingDog PMI provided by S&P (and cited in linked the article), suggests that external activity continues to be much stronger than domestic demand.

    In other words: China’s economy is still highly reliant on exports, it does carries over its troubles into 2026 (this interpretation is in line with several analysts, see, for example, the report by ING Bank).

    Unlike China’s official PMI, the private RatingDog PMI has a sample size focused on private and particularly export-oriented companies. We have seen that the gap between the two PMIs has been growing especially in the second half of 2025, and this gap is now even larger.

    We also see that China’s official NBS Non-Manufacturing PMI fell back into contraction to 49.4 in January 2026 from 50.2 in December 2025, reflecting cautious consumer spending and and persistent stress in the property sector.

    The consequences of China growth model are felt already by ordinary people, as one analysis reads:

    [China’s] The country’s growth has become increasingly expensive to maintain, and its dividends are reaching ordinary households with diminishing force.

    The divergence between headline growth and household reality is now impossible to ignore. While GDP expanded by 5 percent in 2025, median per capita disposable income – a more representative measure of what typical families actually earn – rose by only 4.4 percent, slowing from the 5.1 percent gain in the previous year. Urban residents fared even worse, with median income growth of just 3.7 percent – worse than the 4.6 percent growth in 2024. The slowdown may seem modest in percentage terms, but it signals something profound: the transmission mechanism that once converted aggregate growth into broadly shared prosperity is weakening. – (Archived)

    [Edit typo.]