The Chinese State Government is increasing their target for installed solar power to 35GW’s by 2015 – up from their current capacity of only 7 – 8 GW’s. This means, China will install and commission around 10 GW’s of solar power each year between 2013 and 2015. China’s previous target was 21 GW’s.

The target increase was originally stated by the State Grid who manages the country’s electricity distribution but it now has the backing of the State Council, cabinet and top governing bodies.

The increase will boost the solar industry in China which has faced wafer thin profit margins, massive oversupply, weaker global demand and trade disputes. “China’s solar industry is facing widespread operating difficulties,” the State Council said. “Global demand for solar power has slowed, product exports are facing heavy resistance and the growth of the solar industry is uncoordinated,” it said, citing “severe overcapacity.”

The hope is that the boost will help pick up solar manufacturers in the country and possibly soak up some of the oversupply, although it will most likely not be sufficient enough to eliminate it. “While the Chinese government is determined to boost the domestic market, it is not sufficient to eliminate oversupply,” said Wang Xiaoting, a Beijing-based analyst at Bloomberg New Energy Finance. “Panel prices will stay stable in 2013.”

“I don’t think it eliminates oversupply, but it continues to shrink that demand-supply difference over time.”

Although specifics have not been given, China is said to offer financial support to profitable solar manufacturers as well as encourage restructuring and overseas investment. Tax breaks will be given to solar companies that merge or acquire others and companies are encouraged to form partnerships with those producing raw materials used in solar panel production such as polysilicon.

Analysts are cautious of the huge increase and are skeptical as to whether their infrastructure can handle it as well as the funding for solar subsidies.