SHANGHAI (Reuters) - China's Ministry of Finance announced it will offer tax breaks to manufacturers of solar power products on Sunday, as China moves to support an industry still struggling to deal with massive overcapacity and weak demand.
The ministry said in a short statement on its website that producers of solar power products will receive immediate refunds of 50 percent of value-added taxes.
The National Development and Reform Commission provided subsidies for solar power stations in late August.
"China's bloated photovoltaic industry still faces a grim outlook as many companies are deeply mired in debts," said a report on the official Xinhua news service discussing the announcement.
It cited data from the China Renewable Energy Society saying that the country's top 10 solar panel makers are up to 100 billion yuan ($16.34 billion) in debt, with a debt to asset ratio above 70 percent on average.
Beijing has said it wants to consolidate the industry, but the sector continues to enjoy protection at the central and local level; the latter is particularly strong because solar power companies are frequently major employers.
China's LDK Solar Co Ltd partly defaulted on a bond payment in April, then failed to meet another payment on time in August.
China's Suntech Power Holdings Co Ltd <STP.N> said Chief Executive David King had resigned from the company in mid September, weeks after three directors left amid the solar panel maker's efforts to restructure its debt.
Suntech's Chinese lenders dragged its unit Wuxi Suntech into insolvency proceedings after it defaulted on $541 million in bonds after the business was hit by a glut in solar panels.
(Reporting by Pete Sweeney; Editing by David Cowell)