The Current Status, Challenges, and Future of China’s Photovoltaic Industry: A Literature Review and Outlook

Abstract

This paper reviews the transformative shifts within China’s photovoltaic (PV) industry against the backdrop of a global pivot from fossil fuels to renewable energies, a transition underscored by the pressing demands of climate change mitigation. By systematically analyzing existing literature, this study captures the rapid advancements and dominant role of China in the global PV market, spurred by robust governmental support and technological innovation. It also identifies persistent challenges such as technological gaps, supply chain instability, and evolving regulatory frameworks. Key findings highlight the industry’s significant contributions to national energy security and its pivotal role in achieving China’s carbon neutrality goals. This research underscores the critical importance of the PV industry in steering global sustainable energy policies and practices.

1. Introduction

The world is currently grappling with an energy crisis characterized by over-reliance on fossil fuels, geopolitical instability, and the urgent necessity to mitigate climate change. Historically, the industrial revolution marked a pivotal shift towards fossil fuel dependency, which has since led to significant environmental degradation and accelerated global warming. The Intergovernmental Panel on Climate Change (IPCC) has repeatedly warned that without immediate and transformative action, the world faces dire consequences, including more frequent extreme weather events and rising sea levels [1]. While global greenhouse gas emissions continue to reach record levels, highlighting a persistent and critical challenge, there remains an ongoing shift towards renewable energy sources [2]. This shift, though gradual and faced with significant obstacles, is catalyzed by the pressing need for sustainable development and environmental resilience.

Renewable energy technologies are gaining prominence as viable alternatives, with solar photovoltaic (PV) technology emerging as a frontrunner. The cumulative installed capacity of renewable energy has surged dramatically over the past two decades, highlighting a robust trend towards sustainable energy solutions. According to the International Renewable Energy Agency (IRENA), solar PV generation increased from approximately 1312 GWh in 2000 to 1,294,470 GWh by 2022 (Figure 1), reflecting a substantial shift in global energy paradigms. This exponential growth underscores not only the technological advancements in solar energy, but also the critical role it plays in addressing the energy crisis. Among the various advancements in PV technology, floating photovoltaic (FPV) systems have emerged as a promising alternative to conventional land-based applications, especially in regions where land availability is limited. China, with its vast water resources and rapidly expanding renewable energy capacity, has been at the forefront of deploying floating PV systems. These systems not only help optimize land use by utilizing bodies of water like lakes, reservoirs, and even offshore locations, but they also offer the potential for enhanced energy production efficiency due to the cooling effect of water on the panels [3].

China’s energy landscape exemplifies the nation’s transition towards sustainable development. As the world’s largest energy consumer and greenhouse gas emitter, China faces immense pressures to reform its energy system. The Chinese government has committed to achieving peak carbon emissions before 2030 and carbon neutrality by 2060, articulated in the country’s “dual carbon” goals [4]. This ambitious agenda necessitates a comprehensive overhaul of the energy infrastructure, positioning renewable energy sources, especially solar PV, at the forefront of this transformation. As of 2022, solar PV technology accounted for a remarkable 392,461.8 MW of China’s total renewable energy capacity, underscoring its crucial contribution to the nation’s energy matrix. Such figures indicate not only the rapid expansion of solar capacity, but also the sector’s strategic importance in achieving national energy security and sustainability goals.

The PV industry is vital for several reasons. Firstly, it significantly contributes to diversifying China’s energy sources, reducing dependency on imported fossil fuels, and enhancing energy security [5]. The Chinese government has actively implemented policies and incentives to support the growth of the solar sector, thereby establishing China as the global leader in solar PV production and installation [6]. This leadership not only addresses domestic energy needs, but also positions China as a key player in the global renewable energy market, shaping international energy dynamics (Figure 2).

Moreover, the importance of the PV industry extends beyond mere electricity generation; it serves as a catalyst for economic development and technological innovation [7]. The solar PV sector has created numerous jobs and stimulated advancements in related technologies, contributing to the country’s shift towards a more sustainable and resilient economy. Research suggests that investment in renewable energy technologies can yield substantial economic benefits, including job creation and improved energy access, thereby enhancing overall quality of life [8].

To contextualize China’s progress in PV energy, it is instructive to compare it with other leading nations in the solar energy sector. As of 2022, Germany, the United States, and India were among the top countries harnessing solar power to meet significant portions of their energy needs [9]. Germany has been a pioneer in solar energy utilization, heavily supported by the government’s aggressive feed-in tariff policy initiated in the early 2000s. As a result, by the end of 2022, Germany had installed approximately 55 GW of solar PV capacity, contributing to around 8.6% of its total electricity generation. The German model emphasizes the role of policy in accelerating the adoption of renewable energies and its impact on national energy portfolios.

In contrast, the United States has achieved a solar PV capacity of over 97.2 GW, spurred by a combination of state-level incentives and federal tax credits. This capacity represents about 3.3% of total U.S. electricity production. The U.S. approach showcases the effectiveness of diverse incentive structures and a competitive market environment in scaling up solar energy infrastructure. India, with its abundant sunlight, has rapidly escalated its solar energy efforts, reaching a capacity of about 50 GW by 2022. The Indian government’s ambitious targets and support for solar power through the National Solar Mission underscore the critical role of governmental strategy in fostering renewable energy sectors in developing economies.

Comparatively, China’s approach has centered on integrating massive manufacturing capabilities and substantial government subsidies, positioning itself as the world leader in both manufacturing and deploying solar PV technology. By 2022, China’s installed solar PV capacity had exceeded 306 GW, accounting for a significant share of its renewable energy output and reflecting its commitment to achieving carbon neutrality by 2060 [10].The current literature underscores the multifaceted impacts of the PV industry in China, highlighting both opportunities and challenges. While the rapid expansion of solar capacity presents significant advantages, it is accompanied by challenges such as technological bottlenecks, supply chain vulnerabilities, and regulatory hurdles. Scholars have emphasized the need for integrated policies that address these challenges while fostering innovation and investment in the solar sector [11]. Furthermore, the transition to solar energy must be accompanied by robust infrastructure development and enhanced energy storage solutions to ensure the stability and reliability of the energy supply.

In light of these developments, this study aims to analyze the various dimensions of China’s PV industry through a comprehensive literature review. It will explore the current status of the sector, the challenges it faces, and future directions for research and policy. By delving into these aspects, this paper seeks to illuminate the critical role of solar energy in China’s energy transition and its broader implications for global energy systems.

As the global energy landscape continues to evolve, understanding the dynamics of the PV industry in China is essential for stakeholders, including policymakers, researchers, and industry leaders. This understanding will enable them to navigate the complexities of energy transition effectively and capitalize on the opportunities presented by renewable energy technologies.

As discussed, the shift toward renewable energy, especially solar PV, represents not only a technological shift but also a paradigmatic change in how energy is generated and consumed. As China takes the lead in this transition, its burgeoning PV industry is poised to have far-reaching effects, influencing global energy strategies and aiding worldwide efforts to mitigate climate change. This paper aims to delve deeper into these dynamics, elucidating the role of China’s solar advancements in shaping a sustainable global future, demonstrating that the transition extends beyond mere technological adoption to influence global policy and economic landscapes.

2. Spatial–Temporal Layout of China’s PV Industry

2.1. Overall Aggregation Characteristics

The PV equipment manufacturing industry in China has rapidly evolved into a cornerstone of both the domestic and global renewable energy sectors. As highlighted by Lian et al. [12], there were approximately 4680 PV manufacturing enterprises across China by the end of 2021. This substantial number illustrates a pronounced spatial distribution, exhibiting a staircase-like decrease from the eastern coastal regions toward the western interior. This pattern is not merely a reflection of geography; it encapsulates underlying economic, infrastructural, and policy-driven dynamics that have shaped the industry’s growth.

In the eastern coastal provinces, particularly within the Yangtze River Delta, the Pearl River Delta, and the Beijing–Tianjin–Hebei region, the concentration of PV manufacturing companies is striking. These regions serve as industrial powerhouses, benefiting from robust infrastructure, skilled labor, and a supportive policy environment. For instance, Jiangsu province, a leader in this sector, accounted for a remarkable 1176 PV manufacturers, showcasing not only the scale of but also the regional commitment to renewable energy technologies [13]. This concentration is often linked to agglomeration economies, where firms benefit from reduced transportation costs, easier access to suppliers, and enhanced knowledge spillovers [14,15].

The phenomenon of agglomeration in the PV industry can also be examined through the lens of the “Silicon Valley” model, where clusters of high-tech firms thrive due to collaborative networks and innovation ecosystems [16]. In this context, cities such as Suzhou, Wuxi, and Shenzhen emerge as focal points of technological advancement and entrepreneurial activity. Their success is driven by a combination of strategic government incentives and private investments, which facilitate research and development, and promote workforce training [17].

Secondary agglomerations can be observed in emerging cities like Wuhan, Zhengzhou, and Chengdu, where local governments have implemented targeted policies to attract PV manufacturing. These policies often include financial subsidies, tax incentives, and investment in infrastructure, contributing to the rapid development of these regions into secondary hubs of PV manufacturing [18]. Despite their lower initial enterprise counts compared to eastern provinces, these cities are witnessing a significant influx of new firms, suggesting a shift in industrial dynamics as the industry matures.

Conversely, certain regions, such as Beijing and Tianjin, which were early adopters of PV manufacturing, have not maintained sustained agglomeration trends. This stagnation can be attributed to various factors, including increased land costs, competition for resources, and shifting market demands [19]. Such dynamics underscore the importance of adaptive strategies and the potential for industrial decline if regional actors fail to innovate and invest in new technologies.

The overall spatial distribution of PV manufacturing also reflects broader national strategies aimed at achieving the dual carbon goals. As outlined in China’s latest energy policies, the government emphasizes the need for decentralized renewable energy development, which promotes not only regional equity in industrial distribution but also environmental sustainability [20]. The government’s initiatives have catalyzed the emergence of new players in less developed regions, signaling a potential shift toward a more balanced national industrial landscape.

In conclusion, the PV equipment manufacturing industry in China exhibits a clear pattern of spatial agglomeration, shaped by a combination of economic, geographical, and policy factors. The pronounced clustering in eastern coastal provinces highlights the importance of supportive infrastructure and innovation ecosystems, while the emergence of secondary hubs illustrates the dynamic nature of regional development. Understanding these aggregation characteristics is essential for policymakers and industry stakeholders aiming to foster sustainable growth in the context of China’s energy transition.

2.2. Evolution of Regional Distribution Pattern

The evolution of the spatial layout of China’s PV equipment manufacturing industry reflects significant regional disparities and temporal changes. Lian et al. [12] characterize these changes using provincial and municipal-level analyses to unveil the heterogeneity in enterprise distribution and growth dynamics. Recent assessments indicate that provinces such as Jiangsu, Shandong, Hebei, Guangdong, and Zhejiang have emerged as dominant players, primarily due to their strategic advantages in industrial infrastructure, access to capital, and established supply chains.

At the provincial level, the number of PV manufacturing enterprises has shown a clear increasing trend, particularly in Jiangsu, which alone houses over 1176 companies. This concentration is largely due to the province’s proactive industrial policies, robust R&D investments, and favorable business environment [21]. The spatial distribution reveals that the eastern coastal regions continue to attract new enterprises, demonstrating an intensifying pattern of agglomeration that has persisted over time.

Interestingly, the second tier of provinces—comprising Anhui, Henan, Fujian, and Liaoning—also reflects a growing presence in the PV manufacturing sector. These provinces, while not as dominant as Jiangsu or Shandong, have increasingly attracted new entrants since 2018, signaling a gradual but significant diversification of the industry into central and northern China [22]. The emergence of these regions as secondary hubs highlights the shifting dynamics of industrial growth, often driven by local government initiatives aimed at fostering renewable energy production.

In contrast, regions in the central and western parts of China, such as Jiangxi, Ningxia, and Inner Mongolia, exhibit a lower total number of PV enterprises. However, the data indicate that these areas have become more attractive for new investments, particularly since 2018. The rise in newly established firms in these provinces suggests that, as the industry matures, there is a growing recognition of the potential for solar energy development beyond the traditional coastal areas [23].

The spatial distribution at the municipal level also reveals distinct temporal trends, with cities such as Suzhou, Wuxi, and Shenzhen showcasing continuous increases in the number of enterprises. This pattern is indicative of a robust innovation ecosystem and strong local policies supporting clean energy initiatives [24]. In addition, smaller cities such as Jiuquan and Zhongwei are beginning to carve out niches for themselves in the PV sector, reflecting a broader trend of local industrial specialization.

The evolution of the regional distribution of the PV equipment manufacturing industry also underscores the critical role of government policies. The Chinese government’s strategic initiatives to promote renewable energy—particularly the “Made in China 2025” plan—have incentivized local governments to create favorable conditions for PV manufacturing [20]. These policies often include financial incentives, infrastructure investments, and access to research facilities, thereby catalyzing growth in regions previously overlooked.

Overall, the evolution of the regional distribution pattern in China’s PV equipment manufacturing industry demonstrates a dynamic interplay of local, regional, and national factors. While eastern coastal regions remain dominant, the increasing presence of enterprises in the central and western provinces signifies a more balanced industrial landscape. This shift not only aligns with the national goals of energy transition but also reflects the adaptive strategies employed by various regions to harness the potential of solar energy.

2.3. Spatial Layout Characteristics of PV Industrial Chain

China’s PV industry has developed a comprehensive and integrated industrial chain, encompassing upstream raw material processing, midstream component manufacturing, and downstream installation and operation. Understanding the spatial layout characteristics of this industrial chain is crucial for identifying regional strengths and weaknesses, as well as opportunities for growth. According to Lian et al. [12], the PV manufacturing sector is predominantly concentrated in the midstream, where firms produce critical components such as solar cells, modules, and inverters.

In the upstream segment, the production of raw materials, including polysilicon, silicon wafers, and various metals, is largely concentrated in regions rich in mineral resources. For instance, Xinjiang and Yunnan are notable for their polysilicon production, benefiting from abundant silicon resources and competitive energy costs [25]. However, the upstream sector’s spatial distribution tends to be less dense compared to midstream manufacturing hubs, reflecting the capital-intensive nature of raw material extraction and processing.

The midstream segment, where the bulk of PV equipment manufacturing occurs, shows a pronounced concentration in coastal provinces, particularly Jiangsu, Zhejiang, and Guangdong. These regions not only host a high number of PV manufacturers but also benefit from developed logistics networks, skilled labor pools, and proximity to major markets [26]. Jiangsu, for instance, stands out as a manufacturing powerhouse, with numerous companies specializing in solar cell production and module assembly, thus reinforcing its centrality within the national PV supply chain.

Conversely, the downstream segment, which includes installation and maintenance services, is more decentralized. This sector tends to cluster around urban areas with higher energy consumption and favorable policy environments for renewable energy adoption. Cities like Beijing, Shanghai, and Guangzhou are emerging as key players in the installation of solar energy systems, benefiting from local government support and a growing public awareness of sustainable energy solutions [27].

The spatial layout of the PV industrial chain is also influenced by factors such as technological advancements and shifts in policy frameworks. The rise of innovative manufacturing techniques and automation is prompting companies to reassess their operational locations, leading to some degree of reshoring from overseas back to China. This shift is particularly relevant for the midstream sector, where companies are investing in smart manufacturing and R&D facilities to maintain competitive advantages [15].

Moreover, the interdependencies between different segments of the PV industry create opportunities for synergy and collaboration. For example, firms in the midstream can leverage relationships with upstream material suppliers to streamline production processes and reduce costs, while downstream companies can partner with midstream manufacturers to ensure a reliable supply of high-quality components [28]. This interconnectedness emphasizes the importance of a cohesive industrial ecosystem that fosters innovation and efficiency.

Overall, the spatial layout characteristics of China’s PV industrial chain reveal a complex landscape shaped by resource availability, technological advancements, and regional policies. The concentration of midstream manufacturing in coastal provinces highlights the critical role of infrastructure and market access, while the growing importance of the downstream sector in urban centers signals a shift toward greater energy utilization and sustainability. Understanding these dynamics is essential for stakeholders seeking to navigate the evolving landscape of the PV industry and capitalize on emerging opportunities.

2.4. Spatial Diffusion Patterns

The spatial diffusion patterns of China’s PV equipment manufacturing industry provide critical insights into the mechanisms driving industrial growth and geographical expansion. Lian et al. [12] identify a significant trend of diffusion characterized by various modes, including point–axis diffusion, neighborhood diffusion, hierarchical diffusion, and corridor diffusion. These patterns illustrate how the PV industry has evolved from concentrated hubs into a broader network of manufacturing capabilities across the country.

Point–axis diffusion refers to the phenomenon where new enterprises emerge along major transportation routes or urban centers, leveraging existing infrastructure to facilitate growth. This pattern is particularly evident in the eastern coastal regions, where cities like Suzhou, Wuxi, and Hangzhou have become focal points for new PV firms. The presence of established companies in these hubs attracts new entrants, creating a ripple effect that drives local economic development [29]. This is supported by the findings of Li et al. [30], who emphasize the importance of infrastructure in enabling point–axis diffusion.

Neighborhood diffusion occurs when industries expand into nearby areas, often in response to local resource availability or labor market conditions. In the case of the PV industry, regions adjacent to established manufacturing hubs are witnessing a rise in new enterprises. For example, cities like Hefei and Nanjing have experienced significant growth in PV manufacturing, drawing on the established ecosystem in Jiangsu [31]. This localized expansion reflects the interconnectedness of regional economies and the tendency for businesses to cluster in response to proximity advantages.

Hierarchical diffusion involves the spread of industries from larger, more developed cities to smaller towns and rural areas. This pattern is becoming increasingly prominent as the Chinese government promotes regional development strategies aimed at achieving balanced economic growth. As a result, cities such as Zhengzhou and Xi’an are beginning to emerge as new centers for PV manufacturing, with local governments providing incentives to attract investments and foster industry development [32]. This hierarchical diffusion signifies a strategic effort to decentralize industrial activity, thereby reducing regional disparities.

Corridor diffusion describes the establishment of industrial belts along transportation corridors that connect key economic regions. This pattern is particularly relevant for the PV industry, as it facilitates the movement of goods and resources across vast distances. The development of the China–Pakistan Economic Corridor and other infrastructure projects highlights the strategic importance of connectivity in driving industrial expansion. By enhancing transportation networks, these corridors are enabling the rapid diffusion of PV manufacturing capabilities into underdeveloped regions [33].

The overall spatial diffusion of the PV equipment manufacturing industry is significantly influenced by various factors, including government policies, technological advancements, and market demand. The Chinese government’s initiatives, such as the “Made in China 2025” strategy, have encouraged regional governments to foster local industries and promote renewable energy technologies [34]. This support has been crucial in enabling the emergence of new manufacturing hubs and expanding the geographical footprint of the PV industry.

In conclusion, the spatial diffusion patterns of China’s PV equipment manufacturing industry reflect a complex interplay of geographic, economic, and policy factors. The various diffusion modes—point–axis, neighborhood, hierarchical, and corridor—highlight the dynamic nature of industrial growth and the ongoing efforts to promote regional balance. Understanding these patterns is essential for stakeholders aiming to navigate the evolving landscape of the PV industry and to strategically position themselves within this rapidly changing market.

3. Development Process and Policy Effects of China’s PV Industry

3.1. Timeline of China’s PV Policy Development

The development of China’s PV manufacturing industry can be segmented into six distinct phases: nascent, preliminary development, guided development, downturn, recovery, and optimization. Each phase reflects the evolving landscape of both policy and market dynamics, shaping the growth trajectory of the industry.

Nascent Stage (1975–1996): In the nascent stage, the global PV market witnessed sluggish growth, primarily due to insufficient demand. Domestically, there was a lack of policies to steer the development of PV equipment manufacturing. The industry was still in its infancy, focusing mainly on serving scientific research and military needs. Notably, solar cell factories were established in Ningbo and Kaifeng, marking the initial steps in China’s solar industry [35]. During this period, the few existing solar products were largely experimental and did not contribute significantly to the energy mix.

Preliminary Development Stage (1997–2005): The signing of the Kyoto Protocol in 1997 catalyzed a global shift towards renewable energy, particularly solar energy. In response to this international impetus, China launched several initiatives such as the “Light of China” project and “Electricity to the Countryside” initiative, targeting rural electrification and spurring domestic demand for PV installations [36]. As a result, the number of PV manufacturing enterprises increased from 278 in 2000 to 717 by 2005, giving rise to prominent players like Wuxi Suntech and Trina Solar [12]. This marked the official inception of China’s PV equipment manufacturing sector.

Guided Development Stage (2006–2010): During this phase, rapid growth in global PV capacity prompted Chinese firms to expand production capabilities, primarily for export markets. The Chinese government introduced the Renewable Energy Law and other strategic frameworks that included tax incentives and feed-in tariffs, significantly boosting domestic installation rates. Consequently, the number of PV manufacturers surged from 849 in 2006 to 1448 in 2010. By this time, Chinese PV companies commanded a substantial share of the global market, achieving 44% of the global market share by 2008 [37].

Downturn Stage (2010–2012): Despite the continuous increase in global and domestic PV installations, growth rates began to slow. The financial crisis prompted a downturn in investment in renewable energy infrastructure, particularly in Western markets, which led to declining demand for Chinese solar products. Moreover, the imposition of anti-dumping tariffs by the European Union severely impacted the industry. The number of new enterprises plummeted, with only 112 new companies emerging in 2012, highlighting the sector’s vulnerability to external economic shocks [12].

Recovery Stage (2013–2017): The global PV market rebounded as installations surged worldwide. Policies such as the “PV Leader Program” and various poverty alleviation initiatives stimulated domestic demand. The government’s “Made in China 2025” initiative further encouraged the integration of advanced manufacturing and green technologies, propelling the sector forward [38]. This phase saw a significant increase in the number of PV companies, rising from 1875 to 3360, reflecting renewed optimism and investment in the sector.

Optimization Stage (2018–Present): Since 2018, the growth of the global PV market has stabilized, while domestic demand continues to rise. The National Energy Administration has introduced policies aimed at gradually reducing subsidies, promoting grid parity for PV generation [39]. This period is characterized by a shift towards resource integration and innovation in research and development, steering the industry toward high-tech, high-value applications, such as energy internet solutions and efficient energy utilization.

In summary, the trajectory of China’s PV policy development has been shaped by both domestic needs and international trends, with each phase reflecting the interplay between market demand, governmental intervention, and global economic conditions. This timeline serves as a foundational understanding for further analysis of policy effects on the PV industry.

3.2. Analysis of PV Policy Effects

3.2.1. Global Perspectives on PV Policy Effects

PV policies globally have been pivotal in accelerating the deployment and development of solar energy. The success stories of nations like Germany and the U.S. highlight strategic implementations that have fostered significant growth within their solar sectors. Germany’s Feed-in Tariff (FiT), introduced as part of its Renewable Energy Sources Act, set a precedent by offering long-term contracts to solar power producers at guaranteed rates, significantly above the market level. This policy drove a boom in solar installations, making Germany a world leader in solar energy for several years [40]. Similarly, the United States’ Investment Tax Credits (ITC) have provided a dollar-for-dollar reduction in income taxes for individuals or companies that invest in solar PV systems. This has not only supported the proliferation of residential solar installations but also facilitated large-scale utility PV projects, contributing to a diverse and resilient energy portfolio [41].

In addition to incentivizing installations, policies have played a crucial role in technological innovation and cost reduction. Consistent policy support has led to advancements in PV technology, driving down costs and enabling competitive pricing in the energy market. For instance, the sustained decrease in PV system costs by over 80% since 2010 can be attributed to both advancements in technology and economies of scale, largely supported by proactive policy frameworks [42].

3.2.2. The Chinese Context: Policy Effects and Industry Response

China’s approach to PV policy has been both aggressive and effective, tailored to harness its manufacturing capabilities and meet its energy goals. The Renewable Energy Law of 2006 and its subsequent amendments underscored the country’s commitment to increasing the share of renewable energy in its total energy consumption. These laws mandated grid operators to purchase electricity from registered renewable sources, which boosted investor confidence and expanded China’s solar capacity dramatically [43].

The “Golden Sun Demonstration Project” is a testament to China’s targeted policy approach. It provided substantial subsidies covering up to 50–70% of the total investment costs in PV projects, encouraging both domestic deployment and technological development. This initiative not only improved the PV infrastructure, but also facilitated significant technological and efficiency improvements across the supply chain. The success of such initiatives has positioned China as a global leader in PV manufacturing and deployment [44].

However, the rapid expansion led to challenges such as production overcapacity and a saturated domestic market, prompting shifts in policy to reduce reliance on subsidies and encourage market-based adjustments. This evolution reflects a maturation of the industry as it moves towards more sustainable, competitive market conditions [45].

3.2.3. Comparative Analysis of Policy Effects

Comparing the effects of PV policies from a global perspective with those specific to China reveals common themes and unique national strategies. Both globally and in China, policies have significantly reduced the costs of PV technologies and fostered industry growth. However, the scale and speed of implementation in China have been unique, reflecting its ability to mobilize vast national resources and manufacturing capabilities. This has not only shaped the global PV landscape, but also set benchmarks in terms of production efficiency and cost reduction.

The analysis illustrates that while the mechanisms of policy may vary—ranging from subsidies and tariffs to tax credits and legal mandates—the outcomes tend to converge on enhanced capacity, technological innovation, and greater energy security. The global shift towards reducing dependency on subsidies and fostering a competitive market environment reflects a natural progression as the PV industry matures.

3.3. Development of PV Technology

The evolution of PV technology in China has been marked by significant innovations in and diversification of the technologies used in solar energy systems. Predominantly, silicon solar panels have been the backbone of China’s PV industry due to their efficiency, durability, and cost-effectiveness. The majority of the installed capacity and manufacturing output has traditionally centered around crystalline silicon technology, which remains the most deployed type of solar cell globally and in China.

However, alternative PV technologies have begun to make inroads into the Chinese market, driven by both policy support and technological breakthroughs. Gallium arsenide (GaAs) cells, known for their high efficiency and excellent performance in high-temperature environments, have seen limited but increasing application in niche markets such as space and aviation. Although their higher production cost currently limits broader deployment, ongoing research investment aim to reduce these costs and enhance scalability.

Thin-film solar cells, including cadmium telluride (CdTe) and copper indium gallium selenide (CIGS), offer advantages in terms of lower material costs and flexible applications. They have gained traction in large-scale utility projects and integrated photovoltaic products due to their lightweight properties and lower sensitivity to shading and high temperatures. The market share of thin-film technologies has been gradually increasing, supported by improvements in manufacturing processes and efficiency rates. Perovskite solar cells, a recent innovation, are heralded for their potential to achieve high efficiencies at a lower production cost. Research and development efforts have surged, with several pilot projects and research facilities focusing on overcoming the technology’s challenges related to stability and lead content. China’s investment in perovskite technology research is robust, aiming to position itself as a future leader in this promising sector. Organic solar cells, while still in the early stages of development, are being explored for their potential in portable and wearable solar applications due to their flexibility and varying transparency. The number of enterprises exploring organic PV technologies is small but growing, with several startups receiving government and venture capital funding to advance their research and development.

Overall, the landscape of PV technology in China is evolving rapidly, with silicon-based solar cells dominating the market but with significant research and investment flowing into alternative technologies. This dynamic shift underscores China’s commitment to leading global innovations in solar technology, adapting to new market demands, and supporting sustainable energy goals. The government’s encouragement of diversified technology adoption in the PV sector is evident through various subsidies and incentives aimed at reducing the dependency on traditional silicon technology and promoting a broader range of photovoltaic applications.

4. Influencing Factors of PV Industry Development

The development of the PV industry in China is influenced by several interconnected factors that can be categorized into three primary domains: political, economic, and technological. Each of these domains contributes to shaping the landscape of the PV sector, highlighting the complex interplay of forces that drive its growth.

4.1. Political Factors

Political factors, particularly international dynamics and policy subsidies, play a crucial role in the evolution of the PV industry. Internationally, trade agreements, tariffs, and global market trends directly impact the competitiveness of Chinese PV products. For instance, fluctuations in trade policies can either bolster or hinder market access for Chinese manufacturers, influencing their strategic decisions [46]. On the domestic front, government subsidies and incentives are vital for fostering growth. By providing financial support for research, development, and production, the government lowers entry barriers for new firms and enhances the viability of existing enterprises. Studies indicate a strong correlation between effective policy frameworks and increased investment in the sector, underscoring the importance of supportive political environments in facilitating industry expansion [47]. The alignment of these political factors creates a fertile ground for the PV industry to thrive amid global competition.

4.2. Economic Factors

Economic determinants, including the industrial foundation, market scale, and resource endowment, significantly influence the PV industry’s development. A robust industrial foundation—characterized by existing manufacturing capabilities and technological expertise—enables firms to leverage local resources effectively, driving operational efficiency and innovation [48,49]. Moreover, the scale of the domestic market plays a pivotal role in attracting investment. A growing demand for clean energy solutions encourages manufacturers to increase production, resulting in economies of scale that further reduce costs and enhance competitiveness [48]. Additionally, regions with abundant solar resources are naturally more attractive for PV investments. The geographical distribution of projects often aligns with areas that offer optimal sunlight, thus maximizing energy production potential [50]. Collectively, these economic factors create a conducive environment for industry growth and expansion.

4.3. Technological Factors

Technological innovation is another critical pillar driving the PV industry’s progress. Advances in solar cell efficiency, manufacturing processes, and energy storage solutions are essential for enhancing the performance and reducing the costs of PV systems. Continuous investment in research and development, both from the government and the private sector, fosters a culture of innovation that is crucial for maintaining a competitive edge in the global market [51]. This focus on technological advancement not only improves product offerings, but also addresses the evolving needs of consumers, ensuring that the industry remains responsive to market demands.

In summary, the development of the PV industry in China is shaped by a multifaceted interplay of political, economic, and technological factors. The political landscape, characterized by international dynamics and supportive policy frameworks, creates a conducive environment for growth. Economic determinants, including a solid industrial foundation, significant market scale, and optimal resource endowment, further bolster this development. Finally, technological innovation stands as a cornerstone, driving efficiency and competitiveness. As research in this area continues to evolve, future studies may focus on the implications of emerging technologies and global market trends for the local PV landscape.

4.4. Supply and Demand Factors

The rapid development of the PV industry in China is the result of a combination of factors that have shaped both its supply and demand dynamics. These factors reflect the country’s evolving energy needs, its efforts to meet environmental goals, as well as the industrial and technological advancements that have enabled China to become the global leader in PV production. The development of the PV industry can be understood by examining both the supply-side factors, such as technological innovation, production capacity, and government support, and the demand-side factors, which include growing energy requirements, market incentives, and policy-driven shifts toward clean energy.

From the supply side, China’s dominance in the PV industry can largely be attributed to its robust manufacturing capacity and technological leadership. Over the past few decades, the country has established itself as the world’s largest producer of solar panels, thanks to the economies of scale realized through massive investments in production facilities. Chinese manufacturers benefit from low production costs, driven by the country’s extensive supply chains, availability of raw materials, and government support. Technological innovation has played a crucial role in driving the industry forward, with Chinese companies leading the development of high-efficiency solar cells and modules. For instance, innovations such as bifacial modules, which can capture sunlight on both sides, and the move toward larger wafer sizes have significantly increased the efficiency and output of solar panels, thereby reducing costs and making PV technology more attractive to both domestic and international markets.

Government policy has been another key factor in the growth of the PV industry in China. The government has implemented a range of policies designed to stimulate both the supply and demand for solar energy. Through long-term strategic plans such as the “13th Five-Year Plan for Ecological and Environmental Protection” and the “Made in China 2025” initiative, the Chinese government has provided substantial support for the renewable energy sector, including incentives for the development of solar technology. Additionally, financial mechanisms such as feed-in tariffs (FITs), tax rebates, and subsidies for manufacturers have further bolstered the industry’s growth. These policies have not only made solar energy more affordable but have also spurred China’s transition to a green economy by facilitating the construction of both utility-scale PV farms and distributed rooftop solar systems.

On the demand side, China’s rising energy consumption, driven by rapid industrialization, urbanization, and economic growth, has created a significant demand for renewable energy sources. As the world’s largest energy consumer, China faces the dual challenge of satisfying its growing energy needs while simultaneously reducing its reliance on coal and other fossil fuels. This shift has been catalyzed by the country’s commitment to addressing climate change and improving air quality. In this context, solar energy has become an essential component of China’s strategy to transition to a low-carbon economy, driven by the need to mitigate greenhouse gas emissions and reduce dependence on coal-fired power generation.

The demand for photovoltaic energy is also shaped by the government’s renewable energy targets and environmental goals. China has pledged to hit peak carbon emissions by 2030 and achieve carbon neutrality by 2060. These ambitious climate goals have led to increased investments in renewable energy projects, particularly solar power. The expansion of both large-scale PV farms and distributed rooftop solar installations is critical to meeting these targets. Furthermore, as awareness of environmental issues grows among the general population, the adoption of PV technology has also been influenced by consumer preferences for cleaner, more sustainable energy options. The development of energy storage solutions, such as lithium-ion batteries, has further facilitated the demand for PV systems by improving their reliability and ensuring that solar energy can be used more efficiently, even during non-sunny periods.

Government incentives, including subsidies for residential rooftop solar installations and power purchase agreements (PPAs) for commercial entities, have made the adoption of PV technology more financially viable for both individual consumers and large corporations. These market incentives, combined with a broader public shift toward sustainability, have driven significant growth in the installation of rooftop solar systems across the country. At the same time, large-scale utility PV farms continue to receive substantial support, reflecting the government’s strategy to diversify energy sources and reduce carbon emissions on a national scale.

In summary, the development of China’s photovoltaic industry has been shaped by a combination of favorable supply-side and demand-side factors. On the supply side, China’s manufacturing prowess, technological advancements, and proactive government policies have made the country a global leader in PV production. On the demand side, rising energy needs, the push for clean energy solutions, and government incentives have created a strong market for solar energy. The interplay of these factors ensures that China remains at the forefront of the global transition to renewable energy, positioning the photovoltaic sector as a critical element in achieving the nation’s environmental and energy goals.

5. Evolution of Spatial Layout Patterns in China’s PV Industry

The spatial layout of the PV industry in China has evolved through various developmental stages, reflecting a dynamic interplay between market forces, technological advancements, and policy directives. This evolution can be categorized into three primary spatial layout patterns, each of which exemplifies distinct strategic responses to external and internal stimuli: Market–Cost Orientation, Policy–Resource Orientation, and Comprehensive Orientation. The different spatial layouts are demonstrated in Figure 3.

5.1. Market–Cost Orientation

Initially, the Market–Cost Orientation pattern dominated the spatial distribution of the PV industry. During the nascent stages of its development, Chinese PV manufacturing was heavily influenced by proximity to both upstream suppliers and downstream markets. Key industrial zones such as Shanghai, Jiangsu, and Zhejiang became central hubs due to their established manufacturing infrastructures and access to international markets. This layout was primarily driven by the need to minimize production costs and optimize logistics for exporting goods. Over time, as the industry’s infrastructure matured and the domestic market expanded, this pattern also facilitated the diffusion of PV manufacturing to neighboring regions, thereby reducing dependency on any single locale and enhancing resilience against global market fluctuations [52].

5.2. Policy–Resource Orientation

The Policy–Resource Orientation reflects a shift towards leveraging governmental policies and natural resource allocations to guide industrial localization. This model emerged more prominently with the implementation of differentiated electricity tariffs and solar resource-based subsidies. Regions such as Gansu and Xinjiang, which boast high solar irradiance, have become attractive sites for PV investments. These areas benefit from policy incentives that make solar investments economically viable, thereby fostering a concentrated industry cluster. The central government’s support has been pivotal in encouraging enterprises to relocate or expand into these resource-rich regions, aligning industry growth with broader environmental and economic objectives [53].

5.3. Comprehensive Orientation

The Comprehensive Orientation involves a more nuanced consideration of multiple factors, including market demand, production costs, policy incentives, and local resource endowments. This pattern has become increasingly relevant as the industry faces growing complexities in both supply chains and market conditions. Urban centers in western and central China, such as Chongqing and Chengdu, exemplify this trend. These cities offer a balance of strong industrial bases, proximity to emerging markets, and supportive local policies. As a result, they serve as strategic nodes for the redistribution of the PV manufacturing landscape, facilitating the industry’s spread from the saturated eastern coast to more diverse locations. This redistribution not only helps mitigate risks associated with supply chain disruptions, but also capitalizes on regional strengths to boost overall industry efficiency [54].

The spatial layout patterns of China’s PV industry illustrate a clear trajectory from a market and cost-focused distribution towards more policy-driven and comprehensive strategies. This evolution reflects the sector’s adaptive responses to changing economic landscapes, technological advancements, and governmental policies. As the industry continues to mature, these patterns are likely to diversify further, incorporating advances in technology and shifts in global market dynamics. Future research might focus on how these evolving patterns impact regional economic development and the overall sustainability of the PV industry.

6. Economic and Social Impact Assessment of the Development of PV Industry

6.1. Economic Impact

The development of the PV industry has become a pivotal component of China’s economic landscape, significantly contributing to its GDP and fostering a robust industrial chain that extends from manufacturing to deployment and maintenance. As an integral element of China’s energy strategy, the PV industry not only enhances energy security but also propels technological innovation and employment across various sectors.

An analysis of the economic contributions of the PV industry must begin with its direct impact on China’s GDP. Studies suggest that investment in PV technology has a multiplier effect, generating income and jobs at multiple levels of the supply chain. For instance, the expansion of PV manufacturing capacities in provinces like Jiangsu and Zhejiang has led to regional economic upturns, underpinning the argument that renewable energy investments catalyze regional economic development [55,56]. Furthermore, the operational phase of solar projects consistently contributes to local economies through job creation and tax revenues.

Financial analysis and return on investment in the PV sector are crucial for stakeholders ranging from governmental bodies to private investors. The decreasing cost of PV technology, coupled with government subsidies and support, has enhanced the investment attractiveness of solar projects. According to a recent analysis, the levelized cost of electricity (LCOE) from solar energy in China has seen a significant decline, making it competitive with traditional fossil fuels [57]. Moreover, the financial performance of major Chinese PV companies, which often publish positive returns, illustrates a maturing market that increasingly appeals to both domestic and international investors.

Another essential aspect is the economic benefits along the PV industry chain. From the production of polysilicon to the assembly of solar panels and their eventual deployment, each step creates distinct economic benefits. The upstream sector, which includes materials like silicon and wafers, benefits from high-tech advancements and scales of production, whereas the downstream sector, including installation and maintenance, predominantly drives employment [58]. The integration of these industrial activities contributes to a comprehensive enhancement of the supply chain’s efficiency and resilience, further solidifying the sector’s economic footprint.

The economic impacts of the PV industry in China are profound and multi-faceted, encompassing GDP contributions, job creation, investment opportunities, and industrial chain development. Current research primarily focuses on quantitative analyses of economic contributions, financial viability, and the effects of policy instruments.

6.2. Social Impact

The proliferation of the PV industry in China not only redefines its energy landscape but also ushers in significant social transformations, ranging from increased public acceptance of renewable energy to enhanced societal benefits through sustainable rural development. This section explores the multifaceted social impacts of the PV industry, emphasizing public perception, environmental contributions, and rural upliftment.

Public acceptance and awareness of PV technology are crucial for its widespread adoption. In China, public perception of solar energy has improved markedly, thanks to educational campaigns and visible installations in urban and rural settings. Studies indicate that enhanced public knowledge about the benefits of renewable energy correlates strongly with a willingness to pay a premium for clean energy, which in turn supports further investments into PV technologies [59]. Moreover, the visibility of solar panels in everyday life has been noted to increase community engagement and participation in other green initiatives, fostering a culture of sustainability.

The environmental benefits of the PV industry are perhaps the most tangible social impacts. By reducing reliance on coal and other fossil fuels, solar energy significantly cuts carbon emissions, contributing to China’s ambitious goals for carbon neutrality. The environmental consultancy reports that for every megawatt-hour of solar power generated, approximately one ton of CO₂ emissions is avoided, underscoring the role of the PV industry in combatting climate change [60]. In addition, the reduction in air pollution associated with decreased fossil fuel usage has direct health benefits, reducing respiratory and cardiovascular diseases among the population—a vital social consideration [61].

Another profound social impact is the contribution of PV technology to rural development. In many remote areas, standalone solar systems have been transformative, providing reliable electricity that supports local businesses, improves education by powering schools, and enhances healthcare through electrified medical facilities. The deployment of solar energy in rural areas also mitigates urban migration by creating local jobs and increasing agricultural productivity through solar-powered irrigation systems, which enhance food security and provide a steady income source for farmers [62].

The social impacts of the PV industry in China are deep and impactful, improving the quality of life, enhancing environmental health, and fostering economic stability in rural communities. As research continues, the focus remains on understanding the broader societal changes induced by the adoption of PV technologies, particularly how they influence public attitudes and rural socio-economic conditions. This assessment not only highlights the beneficial social outcomes of PV expansion but also sets the stage for policymakers to tailor future initiatives that maximize these benefits.

6.3. Environmental Impact

While the PV industry plays a crucial role in the transition to sustainable energy, it is important to recognize its environmental impact across various stages of the lifecycle. The extraction of raw materials, particularly for silicon production, can lead to significant land use change, water consumption, and energy usage. Furthermore, the manufacturing process itself involves energy-intensive steps and the use of chemicals that may pose risks to the environment if not properly managed.

However, the environmental footprint of PV technology is considerably lower compared to traditional fossil fuels over its operational life. Once installed, solar panels generate electricity with minimal direct emissions, contributing to a reduction in greenhouse gas emissions and mitigating climate change. The environmental benefits of PV energy become even more significant when compared to coal, natural gas, or other conventional power sources.

The disposal and recycling of photovoltaic panels at the end of their lifetimes are emerging as important issues. While PV panels generally have a long operational life, their disposal after decommissioning can result in environmental challenges due to the potential release of hazardous materials such as cadmium or lead if not recycled properly. To address this, the industry is increasingly focusing on improving recycling technologies and extending the lifespan of panels through design improvements and better maintenance practices.

In conclusion, while the photovoltaic industry has its environmental challenges, ongoing innovation and a shift towards more sustainable practices—both in manufacturing and in the circular economy—can help mitigate these impacts and ensure that the long-term benefits of solar energy outweigh the associated environmental costs.

7. Conclusions

This study has critically examined the temporal and spatial dynamics of China’s PV industry, revealing its vital role in the nation’s energy transformation and the pursuit of its dual carbon objectives. The significant contributions of the PV sector to China’s energy portfolio include not only economic growth and job creation, but also substantial reductions in carbon emissions, which underscore the sector’s capacity to enhance ecological sustainability. The analysis demonstrates that robust policy frameworks and technological advancements have been pivotal in driving the rapid deployment and geographical dispersion of PV installations, which are essential for balancing regional development disparities.

However, the industry is facing several challenges and limitations, such as technological bottlenecks, supply chain vulnerabilities, and the sustainability of policy-driven growth without excessive reliance on subsidies. These issues necessitate ongoing refinement of policies to ensure the sector’s long-term viability and competitiveness amidst changing international trade dynamics and market forces.

Looking forward, it is recommended that the government continues to provide targeted support through subsidies, increased research and development funding, and fostering international collaborations to maintain growth and innovation within the PV industry. Additionally, policies should promote the integration of PV systems into urban and rural infrastructures, broadening social acceptance and the utility of solar energy. Future research should focus on refining PV integration models with the national grid, optimizing energy storage technologies, and exploring the socio-economic impacts of deeper PV system penetration, particularly in rural areas. This study not only contributes to a comprehensive understanding of the sector’s dynamics, but also provides a foundational reference for ongoing scholarly inquiries into sustainable energy transitions, highlighting a pathway towards an equitable and sustainable future.