China’s State Administration for Market Regulation (SAMR) has stepped up scrutiny of photovoltaic pricing, calling on manufacturers to end destructive below-cost competition and shift their focus from price to product quality.

The regulator held a solar industry price-compliance meeting on July 31 in Yancheng, Jiangsu province, as part of the central government’s campaign against what it calls “involution-style” competition.

Companies were instructed to strengthen cost accounting, establish internal price-compliance systems and conduct reviews of their own pricing practices. Leading manufacturers were asked to set an example by regulating both their prices and competitive conduct.

The China Photovoltaic Industry Association (CPIA) was tasked with promoting a newly released industry standard, the General Rules for the Cost Accounting Model of the Photovoltaic Industry, and guiding companies away from low-price dumping and other potential price violations.

Released on July 27 under the guidance of the SAMR and the Ministry of Industry and Information Technology (MIIT), the voluntary group standard establishes a common cost-accounting framework for polysilicon, wafers, cells and modules. It unifies calculation boundaries, coefficients and models across the manufacturing chain.

The framework is intended to address a long-standing enforcement problem: companies have used different accounting methods when determining whether prices cover costs. A more consistent model could provide regulators with a clearer basis for cost investigations and price inspections.

However, neither the meeting nor the standard established a numerical minimum selling price. The regulator said it would connect corporate cost accounting with price enforcement and use measures including compliance reminders, regulatory interviews and administrative guidance.

Companies that seriously disrupt market order and refuse to correct their conduct after warnings may face formal enforcement action.

The announcement triggered an immediate market response. Several polysilicon producers reportedly suspended quotations over the weekend following the meeting and temporarily withdrew lower-priced material from the market.

On August 3, the most-traded polysilicon futures contract on the Guangzhou Futures Exchange reached its daily limit and closed 8.99% higher at CNY 35,890 ($5,290) per ton. Shares in several Chinese solar manufacturers also rose sharply, with Tongwei and Flat Glass closing at their daily limits in Shanghai.

The rally largely reflected expectations that regulatory intervention could support prices and accelerate the closure of high-cost capacity. It did not resolve the sector’s underlying imbalance. Polysilicon supply is still increasing; inventories remain high and demand from wafer producers and downstream projects remains weak.

Market speculation has also emerged that authorities could introduce minimum prices for solar products or price floors in state-owned procurement. No such measure has been announced or confirmed by the market regulators, including SAMR, MIIT or another central government body.

Higher solar product prices could help restore healthier competition across the industry. At the same time, however, Chinese buyers – particularly large state-owned power companies – would face higher project costs and lower expected returns, potentially weakening their appetite for further solar investment.