Underpricing Metrics & Market Impact of Chinese Solar Dumping

Between 2023 and early 2026, Chinese photovoltaic (PV) manufacturers engaged in aggressive price competition—termed neijuan (“involution”) by domestic media. This practice forced module spot and tender prices significantly below both cash costs and total production break-even levels.

Estimates of Underpricing (Cost vs. Spot & Tender Bids)

The China Photovoltaic Industry Association (CPIA), alongside the Ministry of Industry and Information Technology (MIIT), conducted comprehensive industry cost audits to quantify the extent of below-cost sales:

Pricing Metric	Level (RMB / Watt)	Level (USD / Watt)	Industry Condition
CPIA Verified Cost Floor	RMB 0.68 – 0.69 / W	~$0.094 – $0.096 / W	Baseline all-in production cost (including tax & deprecation) for top-tier N-type TOPCon modules.
Average Winning Tenders	RMB 0.62 – 0.66 / W	~$0.085 – $0.091 / W	Typical state-owned utility tenders winning 7% to 10% below production cost.
Extreme Low Spot / Inventory Bids	RMB 0.53 – 0.58 / W	~$0.073 – $0.080 / W	Aggressive distress dumping 15% to 23% below production cost, piercing basic cash operating expenses.

• Cash Cost vs. Full Cost Gap: Manufacturers routinely ignored depreciation on multi-billion-dollar factory assets, selling modules at prices that barely covered raw materials (silicon, silver, glass) and factory electricity simply to maintain cash flow and servicing debt.

Key Market Impacts

1. Widespread Industry Financial Losses

The below-cost price war produced the severe financial loss period in Chinese PV history:

• Sector Losses: In H1 2026 alone, 22 out of 26 listed Chinese solar companies reported combined net losses ranging from RMB 18.3 billion to 21.4 billion ($2.7B to $3.2B USD).
• Impaired Margins: Operating margins across wafer, cell, and module segments plunged into negative territory (-15% to -30%), making existing business operations financially unsustainable without external capitalization.

2. Supply Chain Consolidation & Capacity Curtailment

• Factory Utilization Slashes: Tier-1 and Tier-2 manufacturers slashed factory utilization rates to 50%–70% to curb cash burn.
• Zombie Capacity Retirement: Capital expansion halted, forcing older P-type (PERC) cell lines into immediate retirement while insolvent smaller manufacturers entered bankruptcy or restructuring.

3. Product Quality and Reliability Risks

• With selling prices below production costs, manufacturers faced immense pressure to cut component quality (e.g., reducing backsheet thickness, minimizing silver paste usage, using thinner glass). This triggered concern among overseas distributors regarding long-term 25–30 year degradation and warranty backing.

4. Regulatory Intervention: SAMR, MIIT, and CPIA Frameworks

To stop destructive dumping, Chinese regulators intervened with enforceable cost standards:

• Unified Cost-Accounting System: SAMR and CPIA established a standardized three-tier cost accounting framework (Cash Cost, Production Cost, Full Cost) to eliminate internal profit manipulation by integrated manufacturers.
• Bidding Law Enforcement: Chinese state-owned enterprise (SOE) procurement tenders are now legally required to reject any bid submitted below verified industry production costs.
• Export VAT Rebate Rollback: The reduction and cancellation of China’s 13% export VAT rebate raised export cost baselines, effectively ending subsidized low-cost module supply to global markets like the UK.