Impacts of decreasing subsidies for photovoltaic enterprises in China: a perspective from industrial chain segments

Decreasing photovoltaic (PV) power generation subsidies changes the PV market and may bring unforeseen impacts on enterprises and their industrial chain. Taking China’s 531 policy of 2018 as a case, this study applied a difference-in-differences approach to evaluate the impacts of decreasing subsidies on PV enterprises in different industrial chain segments and analyzed the policy mechanism based on the data from 526 Chinese listed PV enterprises spanning from 2015 to 2019. The results show that only downstream enterprises are vulnerable to decreasing subsidies and that decreasing subsidies induces two impacts, including higher intensity of research and development (R&D) investment and weaker capacity for asset turnover. On average, R&D investment intensity was boosted by 0.824 annually, while total asset turnover decreased by 0.075 annually. The rise in R&D investment negatively influenced asset turnover. In addition, decreasing subsidies induces impacts by reducing enterprises’ revenue, with a reduction in the logarithm of downstream revenue by an average of 0.076 per year. Decreasing revenue motivated downstream enterprises to expand their R&D investment intensity, resulting in lower total asset turnover. Graphical abstract