Skip to comments.China's Solyndra Economy (What's with this idiotic liberal fascination with being like China?)
Posted on 09/16/2012 7:44:28 AM PDT by SeekAndFind
On August 3, the owner of Chengxing Solar Company leapt from the sixth floor of his office building in Jinhua, China. Li Fei killed himself after his company was unable to repay a $3 million bank loan it had guaranteed for another Chinese solar company that defaulted. One local financial newspaper called Li's suicide "a sign of the imminent collapse facing the Chinese photovoltaic industry" due to overcapacity and mounting debts.
President Barack Obama has held up China's investments in green energy and high-speed rail as examples of the kind of state-led industrial policy that America should be emulating. The real lesson is precisely the opposite. State subsidies have spawned dozens of Chinese Solyndras that are now on the verge of collapse.
Unveiled in 2010, Beijing's 12th Five-Year Plan identified solar and wind power and electric automobiles as "strategic emerging industries" that would receive substantial state support. Investors piled into the favored sectors, confident the government's backing would guarantee success. Barely two years later, all three industries are in dire straits.
This summer, the NYSE-listed LDK Solar (LDK), the world's second largest polysilicon solar wafer producer, defaulted on $95 million owed to over 20 suppliers. The company lost $589 million in the fourth quarter of 2011 and another $185 million in the first quarter of 2012, and has shed nearly 10,000 jobs. The government in LDK's home province of Jiangxi scrambled to pledge $315 million in public bailout funds, terrified that any further defaults could pull down hundreds of local companies.
(Excerpt) Read more at seekingalpha.com ...
More Chinese Green Energy Boondoggles (California High Speed Train supporters, take note ):
* China’s top wind turbine manufacturers, Goldwind and Sinovel, saw their earnings plummet by 83% and 96% respectively in the first half of 2012, year-on-year. Domestic wind farm operators Huaneng (HNP) and Datang (DIPGY.PK) saw profits plunge 63% and 76%, respectively, due to low capacity utilization.
* Shenzhen-based BYD (short for “Build Your Dreams”) was a media darling that brought in Warren Buffett as an investor. It was going to make China the dominant player in electric automobiles. Despite gorging on green energy subsidies, BYD sold barely 8,000 hybrids and 400 fully electric cars last year, while hemorrhaging cash on an ill-fated solar venture. Company profits for the first half of 2012 plunged 94% year-on-year.
* China’s high-speed rail ambitions put the Ministry of Railways so deeply in debt that by the end of last year it was forced to halt all construction and ask Beijing for a $126 billion bailout. Central authorities agreed to give it $31.5 billion to pay its state-owned suppliers and avoid an outright default, and had to issue a blanket guarantee on its bonds to help it raise more.
* While a handful of high-traffic lines— such as the Shanghai-Beijing route— have some prospect of breaking even, Prof. Zhao Jian of Beijing Jiaotong University compared the rest of the network to “a 160-story luxury hotel where only 11 stories are used and the occupancy rate of those floors is below 50%.”
* China’s Railway Ministry racked up $1.4 billion in losses for the first six months of this year, and an internal audit has uncovered dangerous defects due to lax construction on 12 new lines, which will have to be repaired at the cost of billions more.
* Minister Liu Zhijun, the architect of China’s high-speed rail system, was fired in February 2011 and will soon be prosecuted on corruption charges that reportedly include embezzling some $120 million. One of his lieutenants, the deputy chief engineer, is alleged to have funneled $2.8 billion into an offshore bank account.
“I will not cede the wind or solar or battery industry to China . . . because we refuse to make the same commitment here.”
— Barack Obama (State of the Union Address, 2012 )
Red China scheduled to become the world's only super power next Tuesday afternoon, about tea time, will be delayed at least until the following Monday morning, developing . . . . .
You don’t think American politicians, dear leader chief among them, drool at the possibility of one day having the kind of power over people the Chinese government enjoys?
99% of China’s solar power products are exported. They personally have no use for such foolishness, but they never refuse an opportunity to separate a fool from their money.
Ping for later...
I have briefly worked in solar power and my BS indicator pegged to the red zone. China exports a lot but their drilling for oil and building coal fired power plants as fast as possible.
Without Gov. money solar would be gone.
An ingenious solution to a none existent problem.
Natural gas is the least expensive and most energy efficient.