Daqo New Energy Corp., a leading manufacturer of solar photovoltaic products, saw its stock soar 10.37% in the pre-market trading on Wednesday. This surge came after China's industry ministry issued new investment guidelines to curb the overcapacity that has plagued the solar manufacturing sector.
The Chinese government has tightened the investment criteria for solar product manufacturing projects. The new rules require a minimum capital ratio of 30% for solar PV projects, up from the previous requirement of 20%. This move aims to rein in the booming solar manufacturing industry, which has been grappling with oversupply and fierce price competition.
The overcapacity and price wars in the solar panel market have led to losses for major producers who have been forced to sell their products at below-market prices. Smaller manufacturers have been facing an even more alarming situation, with some compromising on quality to survive the race to the bottom.
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