Despite being among the world’s top silver producers and housing a vast refining infrastructure, China remains a net importer of physical silver, particularly in the highly processed form of silver powder. This paradox sits at the heart of broader questions around global resources, technical specialization, and industrial policy.
Understanding why China, a metals superpower, continues to rely heavily on imported silver powder requires a closer look at the geology, corporate dynamics, and economic incentives driving silver production worldwide. It also requires unpacking the technological and fiscal forces that push Chinese photovoltaic (PV) manufacturers to source critical inputs from overseas despite abundant domestic raw materials.
Silver mine production worldwide is geographically concentrated, with a heavy skew toward the Americas and East Asia. In 2024, the top silver-producing countries were:
Despite China ranking second or third in annual production, the country still relies heavily on importing silver, especially in its most refined and specialized forms.
Silver powder used in photovoltaic applications is specialized and has specific requirements that differentiate it from raw silver or bullion. It must meet stringent criteria, such as particle size, morphology, tap density, and sintering behavior. Japanese suppliers like DOWA Electronics and Tokuriki Honten consistently produce powders that excel in these areas. They offer high tap density, exceeding 5.5 grams per cubic centimeter, which ensures excellent conductivity when printed onto wafer surfaces. Additionally, they maintain narrow particle size distributions, which are essential for precision screen-printing in advanced solar cell architectures like TOPCon and HJT. Furthermore, their controlled sintering characteristics are tailored to match the delicate interfaces of N-type solar cells.
In contrast, many domestic producers of silver powder in China, such as Fusion New Material and DKEM, are still in the process of developing the ultra-high-end grades required for cutting-edge cell technologies. As a result, while China has ample bullion and refining capacity, its domestic silver powders often do not meet the critical performance metrics necessary for effective front-side solar cell metallization.
Moreover, China's customs and VAT framework inadvertently encourages manufacturers to prefer imported silver powder for export-oriented production over domestic alternatives. Under the "Processing Trade" regime, manufacturers can import silver powder duty- and VAT-free, provided that the final product is re-exported, such as solar cells. Conversely, using locally produced silver powder requires companies to pay a 13% VAT upfront, creating cash flow burdens as they often have to wait for months to recover this cost. The situation has worsened since late 2024, when China reduced the export tax rebate for photovoltaic products from 13% to 9%. This change has resulted in exporters only being able to recover 9% of the 13% VAT they paid on local inputs, effectively incurring a 4% deadweight cost. Meanwhile, imported silver powder remains exempt from VAT under the Processing Trade, prompting solar manufacturers to favor bonded foreign powders to avoid both the VAT and the delays associated with domestic material refunds.
The transition from older PERC solar cells to more efficient N-type designs, such as TOPCon and HJT, further complicates the landscape. These newer architectures require higher quantities of ultra-fine silver powder per watt. For instance, PERC cells typically use around 10 milligrams of silver per watt, while TOPCon cells require approximately 13 milligrams per watt, about 30% more. In comparison, HJT cells demand around 20 to 22 milligrams per watt, necessitating even more precise powder characteristics due to their lower firing temperatures. This shift amplifies the demand for high-performance silver powder, putting additional strain on domestic supply chains that are struggling to match the consistency of Japanese products.
Finally, despite China’s substantial silver reserves, several upstream challenges limit the country’s overall silver availability. Environmental policies, such as the "Green Shield" initiative, restrict new mining projects in ecologically sensitive areas. Many existing mines are maturing and facing declining ore grades. Moreover, since silver is primarily extracted as a by-product of lead, zinc, and copper mining, its availability is contingent on the performance of these metals. Consequently, while China can refine vast quantities of silver from imported concentrates, it remains constrained when it comes to rapidly scaling high-grade silver powder production.
China, despite being a leading producer and refiner of silver, faces a significant challenge in its solar industry due to a fragile dependency on specialized silver powder technology from Japan. This reliance complicates China’s role in the global solar market, particularly as its dominance is built upon an intricate supply chain that is vulnerable to disruptions. Fiscal policies in place inadvertently exacerbate this issue by making domestic materials less competitive compared to imported goods, further entrenching this dependency.
The evolution towards N-type solar technologies is intensifying these challenges, as these new systems impose stricter metallization tolerances that rely heavily on the quality of the silver powder imported from Japan. If geopolitical tensions or logistical disruptions affect the trade between Japan and China, it could pose serious threats not just to Chinese manufacturers but to the entire global solar supply chain.
However, there are potential shifts on the horizon that could alter this trajectory. Domestic powder suppliers in China, such as Fusion, DKEM, and Jingxin, are making significant investments with the goal of closing the quality gap between their products and those from Japan. Additionally, rising silver prices and increasing concerns about supply chain security are motivating the industry to explore alternatives, such as silver-coated copper powders.
Moreover, potential policy reforms like aligning value-added tax (VAT) rates or offering research subsidies could pave the way for greater adoption of domestic powder technology. For the time being, though, the paradox remains stark: the world’s largest silver refiner also stands as the largest importer of one of its most advanced derivatives, a situation that highlights the complexities of micron-scale engineering, global trade dynamics, and the pressing demands of the clean energy revolution.