In the heart of China’s solar manufacturing hubs, a quiet reckoning has unfolded over the past year, as industry titans grapple with the fallout from rampant overcapacity and brutal price competition. Major players, including Longi Green Energy Technology Co., Trina Solar Co., JinkoSolar Holding Co., JA Solar Technology Co., and Tongwei Co., collectively slashed around 87,000 jobs in 2024, representing nearly a third of their combined workforces. This mass downsizing, largely kept under wraps due to political sensitivities in Beijing, underscores a sector once hailed as a cornerstone of China’s green energy ambitions now mired in financial turmoil.

The layoffs come amid a glut of solar panels that has driven prices to historic lows, eroding profit margins and forcing companies to cut costs aggressively. According to filings reviewed by Reuters, these firms employed about 287,000 people at the end of 2023, but by the close of 2024, that number had plummeted, with Longi alone reducing its staff by more than 46,000. Insiders point to overinvestment fueled by government subsidies, which spurred production far beyond global demand, leading to a vicious cycle of discounting and inventory buildup.

The Overcapacity Trap

This isn’t just a hiccup; it’s a structural crisis. China’s solar output has ballooned to dominate over 80% of the world’s supply, but domestic installation rates, while robust at around 210 gigawatts in 2023, haven’t kept pace with manufacturing expansions. Exports face headwinds too, with tariffs from the U.S. and Europe aimed at curbing what they see as dumped goods. As OilPrice.com reports, the industry racked up an estimated $60 billion in losses last year, prompting bankruptcies and exits—over 40 smaller firms delisted, folded, or were acquired since early 2024.

The human toll is profound, particularly in provinces like Jiangsu and Zhejiang, where solar factories are economic linchpins. Workers, many skilled engineers and technicians, have been caught off guard by abrupt terminations, often with minimal severance. Beijing’s emphasis on employment as a pillar of social stability has led companies to downplay the cuts, framing them as “optimizations” in annual reports rather than outright layoffs.

Calls for Consolidation

Industry executives are now urging government intervention for a managed consolidation, akin to past restructurings in steel and coal. Tongwei’s chairman, for instance, has publicly warned of unsustainable pricing, predicting further shakeouts. Yet, as detailed in a TrendForce analysis, the top five firms’ job reductions signal a broader pivot toward automation and efficiency, potentially displacing even more roles in the near term.

Globally, this turmoil could reshape solar economics. Cheaper panels from China have accelerated renewable adoption worldwide, but sustained losses might slow innovation and capacity growth. U.S. and European rivals, watching closely, see opportunities to gain ground if Chinese overproduction eases. Still, with Beijing committed to its carbon-neutral goals by 2060, subsidies may persist, prolonging the pain for an industry that built China’s dominance but now threatens its stability.

Looking Ahead: Risks and Reforms

For insiders, the key question is whether this downsizing marks the bottom or merely a prelude to deeper cuts. Posts on platforms like X highlight growing sentiment around the sector’s woes, with users noting how solar giants like SunPower and SolarEdge have mirrored these trends globally, slashing jobs amid fading green energy hype. As Climate Change Dispatch observes, the inefficiency of subsidy-driven policies has been laid bare, raising doubts about long-term viability without reforms.

Ultimately, China’s solar sector must navigate this storm to emerge leaner, but the path involves tough trade-offs between jobs, innovation, and global market share. With emissions peaking possibly ahead of schedule thanks to renewables, the irony is stark: a green revolution built on economic sacrifice.