Looking a Gift Horse in the Mouth: China’s Production Surge and Innovation in Solar Photovoltaics, 2006–2020

For all its evident benefits, China’s “gift” of cheap solar panels imposed costs as well. Most critics of China have focused on the global distribution of manufacturing jobs created by the growth of the solar industry. An even more significant impact, though, has been overlooked: a change in the industry’s pattern of innovation. Conventional indicators of product innovation, such as patenting and the ratio of research and development (R&D) to sales, dropped precipitously in the wake of the Chinese surge. The decimation of PV manufacturing outside China drove many innovative firms out of the business, in large part because they could not match the predatory prices offered by government-subsidized Chinese competitors. China’s new PV giants have innovated in important ways, especially through process innovation that moved the industry’s dominant technology rapidly down a steep experience curve. But the prospect of shifting to better, cheaper PV products with the potential for even greater emissions reductions over the long run, has been deferred or even lost.