Today’s Focus: Israel to Initiate Gaza Phase 2 Negotiations; Economic Dilemmas Causing “National Progress, People’s Decline” to Fail as CCP Brings Private Enterprises to the Forefront? Solar Industry in Turmoil with Domestic Investment Against the Trend, Completely Out of Sync with Market.
Israeli Foreign Minister Gideon Saar announced on the 18th that Israel will start the second stage of negotiations for the Gaza ceasefire agreement, which includes exchanging imprisoned Palestinians for remaining Israeli hostages and Israel’s demand for complete demilitarization of the Gaza Strip.
The Gaza Strip ceasefire phase 2 negotiations, which were supposed to begin before the end of phase 1 on March 2, have not officially started yet. Saar stated during a press conference that Israel will not accept the “Hezbollah model” in Gaza, emphasizing the demand for “complete demilitarization of the Gaza Strip with no presence of the Palestinian Authority.”
Saar also mentioned that Israel has taken note of alternative plans proposed by Arab countries for the Gaza Strip, designed to counter President Donald Trump’s proposal for the US to take control and rebuild the region. Israeli Prime Minister Benjamin Netanyahu had previously stated that Trump’s idea was worth studying.
In the face of internal and external economic challenges within the Chinese Communist Party (CCP), Xi Jinping convened a symposium for private enterprises in Beijing on the 17th, marking the second such meeting with mainland private enterprise leaders in over 6 years since Xi took office. Xi praised the prospects of the private economy as “broad” and called for private enterprises to “show their prowess.”
Attendees included Alibaba founder Jack Ma, who had faced CCP crackdown after criticizing regulatory agencies in 2020, resulting in the cancellation of Ant Group’s IPO plans and significant fines imposed on Alibaba. Ma’s whereabouts outside China have been closely watched as a symbol of the fate of private enterprises and the political climate.
Xi Jinping’s personal gesture towards private enterprises, especially figures like Jack Ma who have fallen from grace, is seen as an effort to boost confidence and stimulate the struggling economy amid CCP’s economic challenges.
In the midst of CCP’s internal and external economic troubles, the state of China’s majority of private enterprises is far from optimistic, with many already shuttered and those remaining facing downsizing and financial struggles. The reality remains grim, with businesses grappling and the population experiencing income disparities and declining consumption.
Renowned commentator Chung Yuan noted that under the current economic conditions, the vast majority of mainland private enterprises do not see a bright future and are facing an uphill battle amid China’s economic decline, with the leadership at Zhongnanhai remaining at a loss.
At the symposium, Jack Ma’s positioning garnered significant attention. Following his criticism of regulatory institutions in 2020, Ma faced suppression by the CCP and has since resided abroad, making rare public appearances. His placement at the symposium, not in the center of the front row facing Xi, suggests a shift in political symbolism.
Observers believe Xi Jinping’s direct engagement with private enterprises through the symposium, particularly figures like Jack Ma, is aimed at bolstering confidence, lifting the sagging economy, and countering challenges from the US.
Xi has only convened two meetings specifically with private entrepreneurs since taking office, with the previous gathering in 2018 eliciting public concerns over the “national progress, people’s decline” sentiment, suggesting that private enterprises had helped state-owned enterprises achieve development goals and should exit the stage of history.
In 2018, the crackdown on private enterprise intensified, reflected in the collapse of Anbang Group with assets worth 2 trillion RMB and HNA Group facing a similar fate with near trillion RMB debts. The tit-for-tat US-China trade war exacerbated the fears among private enterprises.
At the end of 2018, Xi Jinping promised to support private enterprises during the symposium, and the state media began promoting the importance of private enterprises, portraying them as part of the national fabric, destined for expansion and a greater platform. However, subsequent regulatory actions by authorities targeted private enterprises across various industries, leading to an ominous outlook.
As the government amplified its support for private enterprises while claiming to ease regulatory pressures, recent news and data continue to underscore the grim reality of “national progress, people’s decline.”
Professor Xie Tian from the University of South Carolina Aiken School of Business highlighted that the CCP, despite acknowledging the substantial contributions of private enterprises to the Chinese economy, remains skeptical and unlikely to relinquish the dominant position of state-owned enterprises.
Experts have identified three major challenges facing Chinese private enterprises: state-owned enterprises encroaching on the private sector, arbitrary regulations, and unfair treatment.
In the current dire situation, it is anticipated that under CCP’s aegis, private enterprises may face heightened risks as they are utilized to address the national crisis, potentially exacerbating their vulnerability.
Country Manager for the Asia Pacific Industry and Commerce Association in Taipei, David Chiu, emphasized the internal and external challenges confronting the Chinese economy. Amidst trade tensions with the US, domestic economic contraction, and deflation, Xi Jinping urgently needs the assistance of private enterprises to uplift the faltering economy and counter American challenges.
Political and economic observer Qin Peng in the US underscored that to counter the US, the CCP is likely to provide some financial support for private enterprises, yet this move may not bode well. Utilizing private enterprises to further its global surveillance and dominance goals, while also enhancing control over the Chinese populace, exposes these businesses to significant risks and potential future sanctions from countries like the US.
Driven by CCP’s subsidy policies, China’s solar industry has exceeded global demand, leading to severe overcapacity in 2024, plummeting product prices, declining enterprise profits, and substantial losses across the industry. Despite the overcapacity crisis, the mainland’s solar industry continues to expand production capacities.
In January 2025, China’s solar industry invested 87.5 billion RMB, expanding production by 175 GW. Local governments’ construction of factories, equipment procurement, and hefty subsidies have fueled the expansion of the solar industry against market trends.
By the end of 2024, overcapacity in the solar industry’s primary chain, such as silicon materials, silicon wafers, solar cells, and modules, had surpassed 100%, with prices plunging by over 25% to 35%.
In 2024, out of the six major solar companies in China, only JA Solar recorded meager profits, while the other five reported a combined net loss of approximately 31 to 34.1 billion RMB.
Amid this crisis, local governments continue to invest heavily, disregarding market realities. Local governments provide subsidies for new projects, equipment procurement, green energy policies, talent acquisition, among other initiatives, aiming to attract and retain solar-related projects and enterprises.
Reportedly, local governments view solar projects as pillars for local development and job creation, having made substantial investments, making retreat infeasible even in the face of adversity.
Wang Bohua, Honorary Chairman of the China Photovoltaic Industry Association, attributed the industry’s imbalance to local governments’ support, financial institutions’ eagerness, and the unregulated influx of cross-industry enterprises, leading to a disruption in demand and supply equilibrium.
Driven by prolonged industrial subsidies, various regions in China aggressively launched solar projects, resulting in industry-wide overcapacity far surpassing global demand, triggering intense price competition, continuous profitability struggles, and widespread financial losses impacting the new energy automobile, lithium battery, solar cell, and related sectors.
David Huang, a US-based Chinese economist, highlighted the global trend of anti-dumping measures by Europe and the US, alongside reduced domestic subsidies and increased tariffs. These developments significantly impact the industry, leading to financial losses when tariffs exceed subsidies.
Considering China’s abundant coal resources in Xinjiang and the low cost of electricity generation, the majority of polycrystalline silicon production is concentrated in Xinjiang. Following the US ban on imports of Xinjiang cotton and solar products due to human rights abuses, repercussions are anticipated across China’s solar industry, which may face a wave of closures if the EU follows suit.
Xuyang Dong, an energy policy analyst at the independent think tank Climate Energy Finance, highlighted that CCP’s support for the solar industry reflects centralized industrial policies over market adjustments, leading to these persistent production versus market discrepancies.
Taiwanese macroeconomist, Wu Jialong, emphasized that the CCP’s mismanagement of overcapacity extends beyond the solar industry, affecting real estate, steel, and other sectors with similar repercussions.
Amidst the overcapacity in the solar industry and the resistance in export markets, the solar product export quantity increased in 2024 while revenue decreased by over 30%.
Xi Zhen, a senior figure in the mainland capital sector, noted that the current crisis in the solar industry is exacerbated by low profitability, oversupply-induced price fluctuations, and acute market competitiveness, intensifying financial losses across multiple industries.
In response to EU and US anti-dumping measures, alongside reduced domestic subsidies and increased tariffs, the industry faces heightened financial risks, with potential sanctions from countries like the US looming on the horizon.
As China struggles with overcapacity issues and financial implications within the solar industry, the continued state intervention and market misalignment pose challenges, highlighting systemic issues prevailing in various industrial sectors.
The Epoch Focus Production Team