The Wuxi government has poured a huge amount of subsidies into Suntech. To get government subsidies, the company sold its products to its overseas subsidiaries to boost its sales figures, according to Chinese media reports.

"Suntech's fall would seriously hit China's solar industry, which has experienced a great deal of turbulence since late 2009," said Cheng Peng, a partner with Adfaith Management Consulting.

"Suntech's failure may also hurt other high-tech companies listed overseas, or those seeking IPOs overseas," Cheng said.

Orders for Chinese PV equipment slumped 80 percent year-on-year in 2012, the China PV Industry Alliance said in its latest report.

It said up to 90 percent of Chinese polysilicon makers had halted production, and 80 percent of solar panel producers had shut down or sharply reduced output.

Gao Hongling, deputy secretary-general of the China Photovoltaic Industry Alliance, said Suntech's fall would serve as a warning to other emerging strategic industries in China which also face similar problems of haphazard investment and excessive production capacity.

As for domestic demand for photovoltaic solar panels, she said that the government's target to create a 10-gigawatt market this year will help the industry to some extent.

Contact the writers at zhengyangpeng@chinadaily.com.cn and dujuan@chinadaily.com.cn

Related Readings

Suntech 'could be sued' over $541m in unpaid bonds

Unusual share dealing keeps focus on Suntech

Suntech to shut lone US plant, blaming high costs

Suntech's fate dims amid conflict

Suntech gets $32m emergency loan from local gov't