China Daily:

China is attempting to rein in overcapacity in the country’s solar energy sector despite the government’s ambitious goal to increase solar capacity from 50 megawatts in 2008 to between 10 and 20 gigawatts by 2020.
Enterprises flocking to boost markets in industries such as steel and cement have been common in recent years, with the government then stepping in to correct potential overcapacity.
The central government last week announced plans to curb the expansion of six industry sectors by withholding approval for new investments and tightening financing.
Surprisingly, considering its role in the fast-growing renewable energy sector, polysilicon, which is used to make solar panels and wind power equipment, was included in the industry sectors targeted by the government.
China will order commercial banks not to finance projects in the targeted sectors, the National Development and Reform Commission (NDRC), along with 10 ministries, said in a statement.
The China Securities Regulatory Commission, the country’s capital markets watchdog, also will review applications from the country’s solar energy firms for fundraising activities such as issuing additional shares and private share placement. According to local media reports, the commission is likely to reject such proposals.
The move was triggered by fears of overcapacity in the sector. A government document showed that China’s polysilicon production capacity is 20,000 tons a year, with an output of about 4,000 tons in 2008.
Projects designed for an annual production capacity of 80,000 tons are under construction.
In 2008, solar cell production in China accounted for 40 percent of the global output. Seven of the world’s top 15 solar cell manufacturers are Chinese companies.
Chen Bin, chief director of the NDRC’s industry coordination department, said another reason polysilicon was targeted is because of the high energy costs involved in production of the wafers.
Electricity expenses account for 35 to 40 percent of the total cost to produce polysilicon, he said.
“Currently, the domestic solar energy sector has not yet started up extensively, but 98 percent of the solar cells, which use domestically produced polysilicon, are exported – equivalent to exporting large stores of energy indirectly,” Chen said.

Tom Friedman will be heartbroken.