Since the second half of 2023, the problem of solar overcapacity has become prominent, with constant calls within the industry for production reductions and output controls. As the solar industry transitions from competing on installed capacity to a survival race focused on technology, cost, and cash flow, previously popular capacity expansion projects that were signed in clusters are now facing performance tests. *ST Mubang (603398.SH) recently announced that on January 23, the Wuzhou Municipal Government issued an administrative decision ordering the company to return a total of 510 million yuan in project financial subsidies and construction support funds to the Guangxi Wuzhou High-tech Industrial Development Zone Management Committee and the Finance Bureau of the Yue-Gui Cooperative Special Experimental Zone Wuzhou Management Committee within 10 days of receiving the decision, along with paying 51 million yuan in违约金. The dispute between *ST Mubang and the Wuzhou Municipal Government dates back to July 2022. At that time, the two parties signed an project investment contract, planning to invest 5.2 billion yuan to build a 10 GW photovoltaic cell production base within the Guangxi Wuzhou High-tech Industrial Development Zone. In December the following year, the Wuzhou Municipal Government allocated 270 million yuan in financial subsidies to *ST Mubang and 240 million yuan in project construction support funds to its subsidiary. However, due to repeated delays in the actual project construction and long-term failure to commence production, the Wuzhou Municipal Government issued a prior notice in July 2025, ordering *ST Mubang and its subsidiary to refund the 510 million yuan and bear违约责任. Coincidentally, Eging Photovoltaic Technology Co.,Ltd. (600537.SH), known as the "first solar module stock," announced in late December last year that its Chuzhou solar project, due to delays in construction and落地, received a hearing notice from the project partner, Quanjiao County, which intends to terminate the relevant investment agreement and recover 140 million yuan in出资款. On January 5, Zhejiang Bangjie Holding Group Co.,Ltd. (002634.SZ) also announced receiving a court "Decision," initiating预重整 against the company. The applicant for重整 was Suzhou Huanxiu Lake Zhuguang, a state-owned enterprise, which invested 300 million yuan in a subsidiary of Bangjie in 2023. Subsequently, as Bangjie failed to complete the repurchase on schedule, the SOE filed a claim for 326 million yuan. Furthermore, the solar-related合作建设项目 signed by Bangjie in 2023 with the Yangzhou Economic Development Zone Management Committee and the Zhejiang Quzhou Jiangshan Economic Development Zone Management Committee were also terminated successively in 2025 due to market environment changes, resulting in demands for compensation totaling 15 million yuan. It is noteworthy that most of these projects originated in 2022. This year marked a period of rapid expansion in the solar industry, with traditional companies undertaking large-scale capacity expansions and numerous enterprises跨行业追逐热点 for quick profits. That year, the total output value of China's domestic solar industry exceeded 1.4 trillion yuan, a year-on-year increase of over 95%; the output of various industrial chain segments such as silicon wafers, cells, and modules all increased by more than 55% year-on-year, reaching record highs; module capacity accounted for about 80% of the global total. During the industry's upswing, many local governments placed significant emphasis on solar investment attraction. For instance, the Quanjiao County government established a special task force to coordinate and handle project approval, construction, and operational issues for Eging Photovoltaic, and provided the company with multiple low-cost production factors, including guarantees for the supply of 1000 mu of land and government-funded construction of substations within the factory area. The Wuzhou Municipal Government proposed to build factory buildings and basic supporting facilities for *ST Mubang's investment, granting it nearly six years of rent-free usage rights and providing substantial financing support. "Local government support for the solar industry is mainly reflected in five dimensions: financial subsidies, tax incentives, financing便利, land guarantees, and industrial guidance," said Tian Lihui, Dean of the Institute of Financial Development at Nankai University, in an interview. He stated that these policies played an "incubator" role during the industry cultivation period, promoting rapid规模化生产 and technological iteration in China's solar sector. However, some localities, while rapidly推进 projects, overlooked the issues of industry overcapacity and companies' own risks. It was noted that among the aforementioned three solar companies, two are跨行业 entrants. *ST Mubang is a toy company, known as the "Chinese version of Lego," and Zhejiang Bangjie Holding Group Co.,Ltd. previously focused on garment manufacturing; neither had relevant industry experience before跨行业. *ST Mubang had previously indicated in its agreement that the company was not engaged in photovoltaic cell business at the time, nor did it possess relevant R&D talent teams or production technology reserves. Eging Photovoltaic had also cautioned that the TOPCon cell and module products it was investing in at the time had not yet reached mass production or received customer verification, and subsequent sales were uncertain. Starting from the second half of 2023, the problem of solar overcapacity became prominent, with constant calls within the industry for production reductions and output controls, revealing the "aftereffects" of excessive investment attraction in some regions. Gao Jifan, Chairman of Trina Solar Co.,Ltd. (688599.SH), publicly pointed out in 2024: China's solar sector suffers from重复布局 and卷式 competition, rooted in companies acting independently and investing blindly, capital markets excessively追逐利润 and fueling the trend, local governments过度招商 and蜂拥而上, and financial institutions无序投放 and遍地开花. Regarding how to build a new ecosystem for the orderly development of the solar industry, Tian Lihui suggested that local governments should shift from "universal subsidies" to "innovation incentives," concentrating resources on cutting-edge technologies like perovskite and companies with high smart manufacturing maturity; and transition from "administrative intervention" to "market guidance," by improving standard systems and规范招投标 mechanisms to break down local protectionism and build a fair competitive environment. As the solar industry moves from a "scale expansion" phase into a new stage dominated by "technology," local governments' capabilities should also upgrade from "offering incentives" to "selecting tracks, building ecosystems, and controlling risks," using the "visible hand" to correct market failures. To纵深建设 the national unified market and深入整治 "卷式" competition, a responsible official from the Central Financial and Economic Affairs Commission recently stated, while interpreting the spirit of the Central Economic Work Conference, that by 2026, at the government level, regarding some localities providing违规 incentives such as taxes, fees, land, and electricity prices during investment attraction, even incurring debt to offer subsidies, there will be an acceleration in issuing lists of encouraged and prohibited items for local investment attraction, delineating red lines and bottom lines.