China’s solar industry is losing money. The country is doubling down anyway.

Cheap, abundant Chinese solar panels have become essential to decarbonizing the global energy system. Without them, the world’s clean energy transition would have arguably been slower and more expensive. But China’s solar manufacturing industry now faces a bizarre problem: oversupply.

Chinese solar manufacturers have built far more production capacity than the market can absorb. In fact, China now has enough factories to meet roughly twice the global demand for solar products, according to analysis by the research firm Rhodium Group. If all newly announced factories get built, the country’s manufacturing capacity could double, further widening the gap between supply and demand.

The market imbalance has put Chinese solar panel makers in a precarious position. Market analysts and company executives say the industry’s central problem — a massive oversupply of panels — has triggered vicious “price wars” between competing companies and sent prices plummeting. In the first quarter of 2026, the country’s solar manufacturers announced $1.5 billion in losses, an extension of roughly three years of continuous unprofitability.

Industry behemoths like JinkoSolar and Longi have also been facing slowing installations in China, U.S. trade barriers, and weaker global demand. “There’s been an enormous amount of price wars internally in China, with companies just slashing prices to very, very low levels,” said Hannah Pitt, director of the energy and climate practice at Rhodium Group.

Chinese officials have spent years trying to curb the cutthroat competition, stem overproduction, and stabilize prices, with little success. For all but the most advanced solar products, prices kept falling, and companies kept building new facilities. Regional governments, which have invested heavily in solar supply chains, have been hesitant to trim local development.

Some manufacturers even built illegal factories or produced panels without permits, according to reporting by the South China Morning Post. “Everyone is wondering how long this can last,” said Martin Schachinger, a solar product wholesaler based in Germany. “Even TaleSun, a manufacturer we expected to go out of the market five years ago, still exists.