IDEAS home Printed from https://ideas.repec.org/a/eee/renene/v189y2022icp1145-1153.html
   My bibliography  Save this article

Positive or negative? Study on the impact of government subsidy on the business performance of China's solar photovoltaic industry

Author

Listed:
  • Luan, Ranran
  • Lin, Boqiang

Abstract

China's solar photovoltaic industry has developed by leaps and bounds with the support of government funds and policies over the past decade. Some studies indicate that the supporting effect of government subsidies is not invariable. With the decline or even cancellation of photovoltaic subsidies, the difference in the influence of different subsidy levels on enterprises' business performance is a problem worthy of study, but few papers have paid attention to this point. In this paper, 36 listed photovoltaic enterprises are selected as the research objects. Based on the data from 2012 to 2019, this study measures the comprehensive index of operating performance of photovoltaic industry by using global principal component analysis instead of the single indicator commonly used in existing studies. Further, a nonlinear model is established to study the government subsidy effect on the photovoltaic industry. The results show that the business performance of Chinese solar photovoltaic enterprises is greatly affected by the external environment and policies. There exists a U-shaped relationship between government subsidy and business performance. The decline of photovoltaic subsidies is inevitable. Targeted suggestions will be provided for the government and enterprises for the sustainable development of China's solar photovoltaic industry.

Suggested Citation

  • Luan, Ranran & Lin, Boqiang, 2022. "Positive or negative? Study on the impact of government subsidy on the business performance of China's solar photovoltaic industry," Renewable Energy, Elsevier, vol. 189(C), pages 1145-1153.
    • Handle: RePEc:eee:renene:v:189:y:2022:i:c:p:1145-1153
    DOI: 10.1016/j.renene.2022.03.082
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0960148122003676
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.renene.2022.03.082?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Zhang, Huiming & Zheng, Yu & Ozturk, U. Aytun & Li, Shanjun, 2016. "The impact of subsidies on overcapacity: A comparison of wind and solar energy companies in China," Energy, Elsevier, vol. 94(C), pages 821-827.
    2. Zhang, Huiming & Li, Lianshui & Zhou, Dequn & Zhou, Peng, 2014. "Political connections, government subsidies and firm financial performance: Evidence from renewable energy manufacturing in China," Renewable Energy, Elsevier, vol. 63(C), pages 330-336.
    3. Claessens, Stijn & Feijen, Erik & Laeven, Luc, 2008. "Political connections and preferential access to finance: The role of campaign contributions," Journal of Financial Economics, Elsevier, vol. 88(3), pages 554-580, June.
    4. Xiong, Yongqing & Yang, Xiaohan, 2016. "Government subsidies for the Chinese photovoltaic industry," Energy Policy, Elsevier, vol. 99(C), pages 111-119.
    5. Beason, Richard & Weinstein, David E, 1996. "Growth, Economies of Scale, and Targeting in Japan (1955-1990)," The Review of Economics and Statistics, MIT Press, vol. 78(2), pages 286-295, May.
    6. Czarnitzki, Dirk & Hanel, Petr & Rosa, Julio Miguel, 2011. "Evaluating the impact of R&D tax credits on innovation: A microeconometric study on Canadian firms," Research Policy, Elsevier, vol. 40(2), pages 217-229, March.
    7. Ondřej Dvouletý & Ivana Blažková, 2019. "The Impact of Public Grants on Firm-Level Productivity: Findings from the Czech Food Industry," Sustainability, MDPI, vol. 11(2), pages 1-24, January.
    8. Liu, Da & Liu, Yumeng & Sun, Kun, 2021. "Policy impact of cancellation of wind and photovoltaic subsidy on power generation companies in China," Renewable Energy, Elsevier, vol. 177(C), pages 134-147.
    9. Yi, Hongtao, 2014. "Green businesses in a clean energy economy: Analyzing drivers of green business growth in U.S. states," Energy, Elsevier, vol. 68(C), pages 922-929.
    10. Wang, Yanbo & Li, Jizhen & Furman, Jeffrey L., 2017. "Firm performance and state innovation funding: Evidence from China’s innofund program," Research Policy, Elsevier, vol. 46(6), pages 1142-1161.
    11. Yu, Feifei & Guo, Yue & Le-Nguyen, Khuong & Barnes, Stuart J. & Zhang, Weiting, 2016. "The impact of government subsidies and enterprises’ R&D investment: A panel data study from renewable energy in China," Energy Policy, Elsevier, vol. 89(C), pages 106-113.
    12. Söderblom, Anna & Samuelsson, Mikael & Wiklund, Johan & Sandberg, Rickard, 2015. "Inside the black box of outcome additionality: Effects of early-stage government subsidies on resource accumulation and new venture performance," Research Policy, Elsevier, vol. 44(8), pages 1501-1512.
    13. Zhishuang Zhu & Hua Liao, 2019. "Do subsidies improve the financial performance of renewable energy companies? Evidence from China," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 95(1), pages 241-256, January.
    14. Wang, Hongwei & Zheng, Shilin & Zhang, Yanhua & Zhang, Kai, 2016. "Analysis of the policy effects of downstream Feed-In Tariff on China’s solar photovoltaic industry," Energy Policy, Elsevier, vol. 95(C), pages 479-488.
    15. Howell, Anthony, 2017. "Picking ‘winners' in China: Do subsidies matter for indigenous innovation and firm productivity?," China Economic Review, Elsevier, vol. 44(C), pages 154-165.
    16. Xu, Li & Zhang, Qin & Wang, Keying & Shi, Xunpeng, 2020. "Subsidies, loans, and companies' performance: evidence from China's photovoltaic industry," Applied Energy, Elsevier, vol. 260(C).
    17. Yang, Zhenbing & Shao, Shuai & Yang, Lili, 2021. "Unintended consequences of carbon regulation on the performance of SOEs in China: The role of technical efficiency," Energy Economics, Elsevier, vol. 94(C).
    18. Hai Guo & Jintong Tang & Zhongfeng Su, 2014. "To be different, or to be the same? The interactive effect of organizational regulatory legitimacy and entrepreneurial orientation on new venture performance," Asia Pacific Journal of Management, Springer, vol. 31(3), pages 665-685, September.
    19. Manzhi Liu & Liyuan Liu & Shichun Xu & Mingwei Du & Xianxian Liu & Yanqin Zhang, 2019. "The Influences of Government Subsidies on Performance of New Energy Firms: A Firm Heterogeneity Perspective," Sustainability, MDPI, vol. 11(17), pages 1-20, August.
    20. Chen, Hao & Gao, Xin-Ya & Liu, Jian-Yu & Zhang, Qian & Yu, Shiwei & Kang, Jia-Ning & Yan, Rui & Wei, Yi-Ming, 2020. "The grid parity analysis of onshore wind power in China: A system cost perspective," Renewable Energy, Elsevier, vol. 148(C), pages 22-30.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zheng, Xuemei & Wang, Lu & Hou, Jiajun & Nepal, Rabindra, 2024. "Capacity utilization rate and company performance before the COVID-19 economic crisis: Evidence from listed companies in China’s electricity industry," Energy Economics, Elsevier, vol. 131(C).
    2. Lihua Hu & Yuanyuan Chen & Tao Fan, 2022. "The Influence of Government Subsidies on the Efficiency of Technological Innovation: A Panel Threshold Regression Approach," Sustainability, MDPI, vol. 15(1), pages 1-21, December.
    3. Xu, Xiaofeng & Cui, Xiaodan & Chen, Xiangyu & Zhou, Yichen, 2022. "Impact of government subsidies on the innovation performance of the photovoltaic industry: Based on the moderating effect of carbon trading prices," Energy Policy, Elsevier, vol. 170(C).
    4. Aidana Chalgynbayeva & Tamás Mizik & Attila Bai, 2022. "Cost–Benefit Analysis of Kaposvár Solar Photovoltaic Park Considering Agrivoltaic Systems," Clean Technol., MDPI, vol. 4(4), pages 1-17, October.
    5. Lin, Boqiang & Zhang, Aoxiang, 2024. "Impact of government subsidies on total factor productivity of energy storage enterprises under dual-carbon targets," Energy Policy, Elsevier, vol. 187(C).
    6. Lin, Boqiang & Zhang, Aoxiang, 2023. "Government subsidies, market competition and the TFP of new energy enterprises," Renewable Energy, Elsevier, vol. 216(C).
    7. Huang, Chenchen & Lin, Boqiang, 2024. "How digital economy index selection and model uncertainty will affect energy green transition," Energy Economics, Elsevier, vol. 136(C).
    8. Lin, Boqiang & Xie, Yongjing, 2023. "The impact of government subsidies on capacity utilization in the Chinese renewable energy industry: Does technological innovation matter?," Applied Energy, Elsevier, vol. 352(C).
    9. Su, Xiaoning & Liu, Pengfei & Mei, Yingdan & Chen, Jiaru, 2023. "The role of rural cooperatives in the development of rural household photovoltaics: An evolutionary game study," Energy Economics, Elsevier, vol. 126(C).
    10. Danlei Feng & Mingzhao Hu & Lingdi Zhao & Sha Liu, 2022. "The Impact of Firm Heterogeneity and External Factor Change on Innovation: Evidence from the Vehicle Industry Sector," Sustainability, MDPI, vol. 14(11), pages 1-15, May.
    11. Amalu, Emeka H. & Short, Michael & Chong, Perk Lin & Hughes, David J. & Adebayo, David S. & Tchuenbou-Magaia, Fideline & Lähde, Petri & Kukka, Marko & Polyzou, Olympia & Oikonomou, Theoni I. & Karytsa, 2023. "Critical skills needs and challenges for STEM/STEAM graduates increased employability and entrepreneurship in the solar energy sector," Renewable and Sustainable Energy Reviews, Elsevier, vol. 187(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Wu, Wei & Hu, Yingying & Wu, Qinwen, 2023. "Subsidies and tax incentives - Does it make a difference on TFP? Evidences from China's photovoltaic and wind listed companies," Renewable Energy, Elsevier, vol. 208(C), pages 645-656.
    2. Luo, Xingwu & Huang, Feifei & Tang, Xiaobo & Li, Jialong, 2021. "Government subsidies and firm performance: Evidence from high-tech start-ups in China," Emerging Markets Review, Elsevier, vol. 49(C).
    3. Chang, Kai & Long, Yu & Yang, Jiahui & Zhang, Huijia & Xue, Chenqi & Liu, Jianing, 2022. "Effects of subsidy and tax rebate policies on green firm research and development efficiency in China," Energy, Elsevier, vol. 258(C).
    4. Yan, Chen & Ji, Yaxing & Chen, Rui, 2023. "Research on the mechanism of selective industrial policies on enterprises' innovation performance ——Evidence from China's photovoltaic industry," Renewable Energy, Elsevier, vol. 215(C).
    5. Yu, Feifei & Wang, Liting & Li, Xiaotong, 2020. "The effects of government subsidies on new energy vehicle enterprises: The moderating role of intelligent transformation," Energy Policy, Elsevier, vol. 141(C).
    6. Lin, Boqiang & Xie, Yongjing, 2023. "The impact of government subsidies on capacity utilization in the Chinese renewable energy industry: Does technological innovation matter?," Applied Energy, Elsevier, vol. 352(C).
    7. Zhang, Wenwen & Chiu, Yi-Bin, 2023. "Country risks, government subsidies, and Chinese renewable energy firm performance: New evidence from a quantile regression," Energy Economics, Elsevier, vol. 119(C).
    8. Zheng-Xia He & Shi-Chun Xu & Qin-Bin Li & Bin Zhao, 2018. "Factors That Influence Renewable Energy Technological Innovation in China: A Dynamic Panel Approach," Sustainability, MDPI, vol. 10(1), pages 1-30, January.
    9. Li, Xiao-Lin & Li, Jingya & Wang, Jia & Si, Deng-Kui, 2021. "Trade policy uncertainty, political connection and government subsidy: Evidence from Chinese energy firms," Energy Economics, Elsevier, vol. 99(C).
    10. Liu, Da & Liu, Yumeng & Sun, Kun, 2021. "Policy impact of cancellation of wind and photovoltaic subsidy on power generation companies in China," Renewable Energy, Elsevier, vol. 177(C), pages 134-147.
    11. Zhang, Wenwen & Chiu, Yi-Bin & Hsiao, Cody Yu-Ling, 2022. "Effects of country risks and government subsidies on renewable energy firms’ performance: Evidence from China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 158(C).
    12. Cátia Rosário & Celeste Varum & Anabela Botelho, 2022. "Impact of Public Support for Innovation on Company Performance: Review and Meta-Analysis," Sustainability, MDPI, vol. 14(8), pages 1-16, April.
    13. Gupeng Zhang & Qianlong Zhang & Dujuan Huang, 2020. "Impact of Political Connection Strength on the Internationalization Outcome of Chinese Firms: Perspectives from Market Exploration and Technology Acquisition," Sustainability, MDPI, vol. 12(4), pages 1-17, February.
    14. Pan, Xianyou & Yuan, Ge & Wu, Xianhua & Xie, Pinjie, 2023. "The effects of government subsidies on the economic profits of hydrogen energy enterprises – An analysis based on A-share listed enterprises in China," Renewable Energy, Elsevier, vol. 211(C), pages 445-451.
    15. Chang, Kai & Xue, Chenqi & Zhang, Huijia & Zeng, Yonghong, 2022. "The effects of green fiscal policies and R&D investment on a firm's market value: New evidence from the renewable energy industry in China," Energy, Elsevier, vol. 251(C).
    16. Qi, Xiaoyan & Guo, Yanshan & Guo, Pibin & Yao, Xilong & Liu, Xiuli, 2022. "Do subsidies and R&D investment boost energy transition performance? Evidence from Chinese renewable energy firms," Energy Policy, Elsevier, vol. 164(C).
    17. Lingyan Liu & Minghua Lin & Ming Yu, 2023. "Relationship of internal institutions, knowledge sharing, and technological innovation in characteristic cultural enterprises: Evidence from China," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(1), pages 515-524, January.
    18. Su, Zhong-qin & Xiao, Zuoping & Yu, Lin, 2019. "Do political connections enhance or impede corporate innovation?," International Review of Economics & Finance, Elsevier, vol. 63(C), pages 94-110.
    19. Grafström, Jonas & Poudineh, Rahmat, 2023. "No evidence of counteracting policy effects on European solar power invention and diffusion," Energy Policy, Elsevier, vol. 172(C).
    20. Zhishuang Zhu & Hua Liao, 2019. "Do subsidies improve the financial performance of renewable energy companies? Evidence from China," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 95(1), pages 241-256, January.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:renene:v:189:y:2022:i:c:p:1145-1153. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/renewable-energy .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.