ABSTRACT
Activities in China between 2000 and 2016 contributed most directly to inexpensive PV modules. China’s growth was fueled by: high-risk entrepreneurial activity, aggressive municipal governments that mobilized resources for these firms, massive demand from Germany, and drawing on expertise from other—originally semi-conductor manufacturing but later high volume, low margin sectors like textiles. China’s “organizational capability” allowed these firms to hire quickly, produce quickly, and improve quickly—exactly the qualities that the German PV market required. Low labor costs gave China an international comparative advantage in the key scale up period of 2000–07, even if this advantage dissipated with the swift proliferation of automation. Early entrepreneurs had trained in Australia and developed expertise over many years there. A crucial step was when Chinese firms, like Suntech, obtained technology certification, which provided reliability to skeptical early adopters in Germany. Western capital markets funded much of this growth, particularly the purchase of $30 billion of manufacturing equipment from Europe, the US, and Japan. After 2009, the Chinese central government played the important role of extending billion-dollar lines of credit to PV firms. The Chinese feed-in tariff, created in 2011, allowed the industry to continue to grow even after the global financial crisis, reform of the German subsidies, and import tariffs slowed demand for Chinese exports.
