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By David Urani

The solar industry, particularly those companies in China, has been in somewhat of a tug-of-war lately due to scrutiny by the EU over dumping. Talks between China and the EU have preliminarily set out a potential rule whereby China would be allowed to sell 10GW of solar goods to the EU, but then would be subject to tariffs after that. However, recent reports suggest those talks may have stalled.

Nevertheless, while the talks with the EU go on, China has just set out to boost its own domestic solar usage and that could well offset any shortfalls China may see in Europe. China's new plans are ambitious, aiming to increase the amount of solar power installed in the country by five times to 35 GW. That makes for 10GW of additional solar capacity per year (that would match that preliminary EU tariff threshold).

Of course, the industry is already dealing with an oversupply issue that has made it somewhat tough to turn a profit these days, and new government investment in China will help alleviate that. But they have other incentives ready as well. China says that it will offer tax breaks for acquisitions and mergers within the industry, as well as for restructuring plans, as a way to facilitate consolidation in overall production capacity and to reduce the oversaturation in the market.

Naturally the news is a big positive for the industry, with Chinese solar names like Yingli (YGE), Trina (TSL), Canadian Solar (CSIQ) -- which is actually Chinese despite its name -- JinkoSolar (JKS), JA Solar (JASO), and LDK Solar (LDK) each up more than 10% at midday. The Guggenheim Solar ETF (TAN), which tracks several global solar companies, was up 8%, breaking to a new 52-week high.

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Source: Chinese Solar Flaring Up