* China adds $1.1 bln more in subsidies to solar sector -
* Chinese solar stocks jump in U.S. trading
(Recasts with details on additional subsidies, adds company
comment, updates shares)
By Swetha Gopinath and Krishna N Das
Dec 12 China has added a further $1.1 billion in
subsidies to its solar power sector, more than doubling its
support this year, Xinhua reported on Wednesday, sending shares
of Chinese solar power companies up sharply in U.S. trading.
Shares of Trina Solar Ltd and Yingli Green Energy
Holding Co surged more than 20 percent in morning
trading, while those of JA Solar Holdings Co Ltd were
up 14 percent. Shares of JinkoSolar Holding Co Ltd and
Suntech Power Holdings Co Ltd rose about 10 percent.
The Chinese government has allocated a further 7 billion
yuan ($1.1 billion) in subsidies to the solar sector, taking
this year's support to 13 billion yuan, the official Xinhua news
agency reported on Wednesday, quoting the finance ministry. (link.reuters.com/ryg64t)
State-run banks in China have already extended billions of
dollars of credit to their solar firms, sparking a European
Commission investigation into subsidies for Chinese companies.
The United States earlier this year imposed steep tariffs on
some solar panel imports from China.
"What Beijing is doing is essentially trying to replace the
diminished export sales with lower price, lower margin domestic
sales," said Raymond James analyst Pavel Molchanov. "It is a
The news of the hefty investment comes a day after Xinhua,
quoting an industry insider, said China may almost double its
upper limit for solar power capacity to 40 gigawatts (GW) by
China in September raised its 2015 target for solar power
capacity by 40 percent to about 21 GW, the third rise in just
over a year.
"We are positively encouraged to see support for increased
PV power generation channeled at the project level, where we are
conducting a growing proportion of our global business with
local partners, which includes building owners," said Thomas
Young, a spokesman for Trina Solar.
JinkoSolar earlier this month said its Swiss unit will get
up to $1 billion over five years from China Development Bank
to fund solar projects outside China.
Though state support has helped Chinese companies raise
their output manifold, an oversupply of solar products and weak
demand in Europe have virtually erased margins at the firms.
"Just because you sell more megawatts at zero percent
margins doesn't mean you'll make more money. China will be able
to absorb more capacity next year, but it doesn't change the
economics of solar," said Aaron Chew, an analyst at Maxim Group.
LDK Solar Co Ltd, which is heavy in debt like most
other Chinese solar companies, said on Wednesday it was in talks
with some creditors to get flexibility on certain terms and
conditions of its offshore debt.
Shares of the company, valued at about $132 million, were up
16 percent in afternoon trading.
($1 = 6.2518 Chinese yuan)
(Reporting by Swetha Gopinath and Krishna N. Das; Editing by