China SAMR PV price compliance campaign lifts solar stocks up to 3.9%

China's market regulator will convene the photovoltaic industry on Friday to enforce cost-accounting rules, aiming to end price wars that have squeezed margins.

The Price Supervision and Anti-Unfair Competition Bureau under the State Administration for Market Regulation will host a price compliance guidance meeting on July 31, inviting the China Photovoltaic Industry Association and major manufacturers to strengthen cost auditing and implement the "General Rules for Cost Accounting Models in the Photovoltaic Industry," according to industry sources.

"The meeting is aimed at guiding the photovoltaic industry to strengthen cost auditing and curb irrational competition," an industry source familiar with the matter said.

Hong Kong-listed solar stocks rallied alongside the broader market. The Hang Seng Index rose 363 points, or 1.4%, to 25,674, with turnover at HKD 169.7 billion. XINYI SOLAR (00968.HK) traded at HKD 2.19, up 2.82%, after peaking at HKD 2.20. GCL TECH (03800.HK) gained 1.69% to HKD 0.60, while FLAT GLASS (06865.HK) advanced 3.85% to HKD 6.74. Short selling activity was elevated, with XINYI SOLAR seeing 42% of its trading volume in short sales, totaling HKD 33.4 million.

The compliance campaign targets a prolonged period of irrational pricing that has eroded profitability across China's solar supply chain. Tighter cost-accounting requirements could stabilize module prices and improve margins for efficient producers such as XINYI SOLAR and GCL TECH, while smaller manufacturers with higher cost structures may face increased pressure.

The Chinese PV industry has been grappling with severe overcapacity since 2023, when annual module production capacity surpassed 1,000 GW — more than double global demand. Polysilicon prices collapsed more than 80% from their 2022 peaks, pushing many smaller producers into losses. The last major regulatory intervention came in late 2023, when the Ministry of Industry and Information Technology introduced capacity expansion restrictions, though enforcement proved uneven.

The new cost-accounting framework, if strictly enforced, could serve as a de facto price floor by requiring manufacturers to price products above verified production costs. This would mark a shift from the industry's recent pattern of selling below cost to maintain market share. BOCOM International identified GCL TECH as the biggest beneficiary of new polysilicon energy consumption national standards, reiterating a buy rating on the stock. The brokerage's view suggests that larger, vertically integrated producers with lower unit costs stand to gain most from regulatory tightening.

The SAMR's intervention signals growing government concern over the financial health of a strategic industry where China dominates global production. Solar module exports fell 14% in 2025 from the prior year as trade barriers in the US and Europe compounded domestic pricing pressure. The meeting on July 31 will be closely watched for any indication of enforcement mechanisms or pricing benchmarks that could reshape competitive dynamics.

This article is for informational purposes only and does not constitute investment advice.