This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
See Cramer's multi-million dollar portfolio for FREE and get his new book Get Rich Carefully! Learn More

The Week in Solar: 'Too Big To Fail' Moment Arrives for China

The Wall Street reports have been surfacing since January predicting that China will exceed expectations this year, and some of this Chinese solar demand bullishness had been responsible for a more encouraging view of the solar market coming off 2011 lows. These reports received one more boost with the German hard line on solar.

Will China overnight become the largest solar market in the world?

The answer is, it better. China has no choice. After years of shrewdly living off the solar incentive schemes in Europe, led by Germany, as a way to fund very profitable solar manufacturing enterprises without needing to stimulate its domestic solar growth, the Chinese solar monster has nowhere to turn but China for immediate growth.

Yes, the U.S. is growing, and so is India, and in North Africa and the Middle East and across the globe there are markets where in the years ahead solar will be economic without any subsidy support. But as far as 2012 is concerned, Chinese solar companies are on a fast boat back to their home country.

"China is not doing anyone else a favor, it's doing itself a favor by rescuing an industry because of the stake it has in it. China has taken solar as one of 7 industries to subsidize hell or high water," says Auriga Securities analyst Hari Chandra.

For investors, though, the question is not whether China finally gets serious about absorbing its own solar manufacturing output, it's whether that makes any difference to Chinese solar profits and as a basis for investment in the sector.

"The China rescue will be a social rescue, not a profit rescue. The government has to make sure these companies can function so jobs are not lost," said Chandra.

Throughout 2011, as the situation worsened for LDK Solar and its peers -- and as U.S. solar companies began slouching into bankruptcy, led by Solyndra -- the point was made by even the most bearish solar analysts that there is no such thing as true bankruptcy risk in a Chinese solar stock that has enough scale, like LDK. The rhetorical question that distinguished Chinese solar from Solyndra was this: "Have you been to LDK's facility. It's a small city!"

Stock quotes in this article: TSL, LDK 

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
DOW 16,408.54 -16.31 -0.10%
S&P 500 1,864.85 +2.54 0.14%
NASDAQ 4,095.5160 +9.2910 0.23%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs