online.wsj.com
19 Dec 2012
China opened the door to consolidation and bankruptcies among its troubled solar-products companies, steps that could help trim overcapacity in a global industry that has suffered losses and liquidations and has sparked a global trade spat.
In a statement late Wednesday, the State Council, China's cabinet, said it would reform the industry, such as by encouraging mergers and acquisitions. The cabinet will reduce government support and ban local governments from supporting failing domestic solar companies, it said.
The State Council also said it would make good use of a "bankruptcy mechanism", suggesting that China would make it easier for companies to declare bankruptcy--a rarity in the solar industry, as well as in China as a whole.
The statement didn't offer details, and it wasn't clear whether Chinese officials would follow it up with specific policies that could lead to shutdowns of Chinese companies and factories. Any such efforts would face considerable opposition from city, county and provincial governments that rely on the companies for tax revenue, employment and economic growth.
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