Last month, one of the largest Chinese module manufacturer, Suntech filed bankruptcy which shows that now Chinese manufacturers are also facing the heat. On one side there is anti-dumping duty enforced by various countries at the same time the over inventory of these modules have forced these manufacturers. Suntech could not pay the bondholders and Chinese government was reluctant to support Suntech financially due to negative cash flows which led to bankruptcy of Suntech. Last quarter, Suntech registered a negative growth of -3.3%, the company reported net cash position of 44 million Dollars against a debt of 2 Billion Dollars. While Suntech is the largest manufacturer, it is to be seen that how Chinese government handle this crisis and insulate other manufacturers from similar fate. Although Chinese module manufacturers have supported drastic decline in module prices this was because Chinese government has supported these module manufacturers through various incentives in terms of zero interest that subsidise the electricity and other policy measures. This led to develop module manufacturing capacity of 30 GW per annum within China itself, which is half the global manufacturing capacity. The heat of this was seen in the form of US and European manufacturers filing bankruptcy and last year 8 out of top 10 manufacturers got bankrupt because of very basic reason that chines manufacturers were supplying modules at half the price as compared to US and European manufacturers. However, now Chinese manufacturers are now facing over-capacity and in order to dispose the inventory the modules are being sold as low as 50 cents per Watt. Recently , yet another Chinese manufacturer LDK solar has infused 30 million cash infusion to run their show although there was a support from Chinese Development bank to LDK Solar in form of soft Loan 70.5 Million Dollar. Chinese government is still supporting these manufacturers and China Development bank has provided has provided credit exposure of the order of 7 Billion Dollar in 2011. It is likely that Chinese government will keep Suntech factory operating and will bail out Suntech through bond-repayment to American investors. There’s a possibility of re-structuring the payment to bondholders for a longer maturity period.