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On Tuesday, Trina Solar announced that the government has picked the company to establish a key state solar laboratory. Many Chinese solar peers had applied for the first key lab because an approval means new business and strong support from China's central government. Companies who applied for a lab include Trina Solar (NYSE:TSL), Suntech Power (NYSE:STP), Yingli Green (NYSE:YGE), JA Solar (NASDAQ:JASO), Solarfun (SOLF) and LDK Solar (NYSE:LDK).

Based the history of the Chinese economy, when the government backs a company, it usually means a brighter future ahead vs. its peers as it has priority to access state owned large projects. Trina Solar has the clear technological advantage when it comes to PV efficiency. Trina has become the de facto leader in the crystalline PV module market, just like First Solar (NASDAQ:FSLR) is the leader in the thin film PV sector. The Chinese market accounts for less than 10% of Trina's overall revenue, however Trina's dominant role in China's solar industry likely bodes well for its parabolic growth in China's domestic market in 2010 and beyond. It is believed that the Chinese domestic PV market will be bigger than the rest of the world's when the government's $454B investment is fully placed over the next 5 years.

Disclosure: Long FSLR

Source: Chinese Government Picks Trina Solar over Competitors