Tensions in the Middle East and mounting energy prices have made Beijing less willing to enforce anti-involution or supply consolidation measures on its solar industry, prolonging a price war as solar manufacturers continue to bleed cash, analysts say.

“Anti-involution or supply consolidation might not be a top priority for the government,” said Evan Li, head of Asia energy transition research at HSBC.

“[The Iran war] will result in much more competitive and low pricing for solar for the time being,” he said, adding that policymakers were focused on containing inflation and maintaining energy security.

Chinese policymakers pledged last year to tackle “involution”, the term used to describe destructive competition and excessive duplication of investment, by pushing for consolidation among solar manufacturers suffering from chronic overcapacity.

But in practice, some local governments and banks had continued to support loss-making manufacturers as they tried to avoid bankruptcies and job losses.

However, analysts said that the Iran conflict and rising energy prices have made Beijing even less willing to oblige companies to make aggressive capacity cuts that could reduce supply. China is the dominant force in the solar industry with control of about 90 per cent of the global supply chain.