Positive or Negative? Study on the Impact of Government Subsidy on the Business Performance of China's Solar Photovoltaic Industry

27 Pages Posted: 8 Dec 2021

See all articles by Boqiang Lin

Boqiang Lin

Xiamen University - Collaborative Innovation Center for Energy Economics and Energy Policy

Ranran Luan

Xiamen University

Abstract

China’s solar photovoltaic industry has developed by leaps and bounds with the support of government funds and policies over the past decade. With the goal of carbon neutral by 2060 in China, there is a huge space for future development of China’s solar photovoltaic industry. However, the existing studies mostly focused on the impact of government subsidies on a single aspect of industrial performance, ignored its comprehensive consideration. In this paper, 36 listed photovoltaic enterprises are selected as the research objects. Based on the data from 2012 to 2019, the comprehensive index of operating performance of photovoltaic industry is measured by using global principal component analysis , and a nonlinear model is established to study the effect of government subsidy on the photovoltaic industry. The results show that the business performance of Chinese solar photovoltaic enterprises is greatly affected by the external environment and policies. There exists a U-shaped relationship between government subsidy and business performance. At present, most of Chinese listed photovoltaic companies are in the phase of excess subsidies. The decline of photovoltaic subsidies is inevitable. Targeted suggestions will be provided for the government and enterprises for the sustainable development of China’s solar photovoltaic industry.

Keywords: China's solar photovoltaic industry, business performance, government subsidies, global principal component analysis, U-shaped relationship

Suggested Citation

Lin, Boqiang and Luan, Ranran, Positive or Negative? Study on the Impact of Government Subsidy on the Business Performance of China's Solar Photovoltaic Industry. Available at SSRN: https://ssrn.com/abstract=3980441 or http://dx.doi.org/10.2139/ssrn.3980441

Boqiang Lin (Contact Author)

Xiamen University - Collaborative Innovation Center for Energy Economics and Energy Policy ( email )

Fujian
China

Ranran Luan

Xiamen University ( email )

Xiamen, 361005
China

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