On the evening of August 24, *ST Mubang announced that its wholly-owned subsidiary, Guangxi Mubang, received a notice from the Finance Bureau of the Guangdong-Guangxi Cooperation Special Experimental Zone (Wuzhou) Management Committee demanding the return of 240 million yuan in support funds for major industrial project construction. This follows an administrative decision issued earlier this year by the Wuzhou Municipal Government ordering *ST Mubang and its subsidiaries to return a total of 510 million yuan in fiscal subsidies and support funds, plus 51 million yuan in penalty fees. Both recovery actions pertain to the same project: the Guangxi 10GW TOPCon photovoltaic cell production base.

With a planned investment of 5.2 billion yuan, the project was scheduled to commence production in December 2023. However, after the first cell offline ceremony in 2024, construction came to a complete halt. By the time it resurfaced in public view two years later, it had become a burden that both the government and the enterprise were eager to shed. Wuzhou is not alone in this predicament—similar scenarios are unfolding across multiple regions in China, from Inner Mongolia to Anhui to Jiangsu. At the time of contract signing, enterprises could secure land, factories, and subsidies with ease. But as industry cycles turned, production lines stalled and investments shrank, pushing these temporary expansion agreements into a phase of settlement and clawback.

The 23.8 Billion Yuan Expansion Gamble

The Wuzhou project traces back to 2022, a historic peak for the photovoltaic industry. The domestic output value exceeded 1.4 trillion yuan, growing over 95% year-on-year, with production growth rates exceeding 50% across major segments like silicon wafers, cells, and modules. Amid this market boom, photovoltaic projects became hot commodities that local governments competed fiercely to attract. The frenzy reached such heights that in April 2022, Mubang Hi-Tech acquired 100% equity of Haoan Energy for 980 million yuan in cash—at a premium rate of 694%, more than three times the average net asset premium in comparable transactions. In July of the same year, Mubang Hi-Tech signed an investment contract with the Wuzhou Municipal Government for the 10GW TOPCon cell production base project, with total investment reaching 5.2 billion yuan.

This was clearly a high-stakes gamble, yet few saw it as problematic at the time. Subsequently, Mubang Hi-Tech rolled out additional TOPCon cell, silicon wafer, and ingot expansion plans in Ezhou (Hubei), Tongling (Anhui), and Xinzhou (Shanxi), plus an 8GW cell project signed with Anyi County in June. In hindsight, if all these projects had been completed, the company would have added 38GW of TOPCon cell capacity, 20GW of ingot pulling capacity, and 10GW of slicing capacity, with total investment reaching 23.8 billion yuan. As one of the earliest local governments to sign with the company, Wuzhou demonstrated remarkable sincerity—offering not only factory construction and supporting infrastructure but also a nearly six-year rent-free period and substantial financing support. In December 2023, the Wuzhou government disbursed two payments to Mubang Hi-Tech and its subsidiaries: 270 million yuan in fiscal subsidies and 240 million yuan in construction support funds, totaling 510 million yuan.

For Mubang Hi-Tech, which had just undergone transformation, this capital significantly eased the early-stage investment pressure of the project. Unfortunately, this investment did not yield the expected returns. Due to prolonged construction delays and failure to commence production, the Wuzhou government issued an administrative decision notice in July 2025, requiring the company and its relevant subsidiaries to return the 510 million yuan received and bear corresponding liability for breach of contract. This did not immediately sever ties—both parties attempted to "extend the life" of the project through a supplementary agreement. Under that agreement, Mubang Hi-Tech was required to deposit an initial 150 million yuan into the project's dedicated account by August 4, 2025, but the company failed to fulfill this obligation. In November 2025, the Guangdong-Guangxi Cooperation Special Experimental Zone (Wuzhou) Management Committee issued another notice demanding payment of 150 million yuan plus 13.65 million yuan in penalty fees. By January 2026, the Wuzhou government formally issued an administrative decision ordering Mubang Hi-Tech to return the 510 million yuan and pay 51 million yuan in penalties. Now, yet another demand notice for the 240 million yuan support funds has been delivered, and this tug-of-war over contract performance, refunds, and liability is clearly far from over.

How to Repay Nearly 600 Million Yuan in Subsidies?

For *ST Mubang, the massive fund recovery brings more than just legal risks. According to public disclosures, as of the 2026 semi-annual report, the company has already accrued liabilities for these amounts. If the funds are ultimately returned, it will have a material adverse impact on the company's current and future profits, cash flow, and financial condition. Moreover, settling this debt will not be easy for *ST Mubang. In the first half of 2026, the company recorded revenue of 168 million yuan, up 19.27% year-on-year, but posted a net loss attributable to shareholders of 221 million yuan, with losses continuing to widen. More critically, the three project subsidiaries established for expansion all reported zero revenue in the first half of the year. Among them, Guangxi Mubang Hi-Tech New Energy Co., Ltd. corresponds to the 5.2 billion yuan Wuzhou project. The semi-annual report shows the project's construction-in-progress book value at 1.147 billion yuan, with 132 million yuan in impairment provisions already recognized.

Large-scale photovoltaic projects in Tongling and Xinzhou have long been suspended, while projects in Anyi and Ezhou were terminated before even materializing. The photovoltaic business, once regarded as a "second growth curve," has been consuming cash flow while exacerbating the company's debt burden. As of the end of June 2026, *ST Mubang's net assets attributable to listed company shareholders had turned negative at -74.7558 million yuan, with the debt-to-asset ratio rising to 104.58%. Cash and cash equivalents stood at only 65.3277 million yuan, while short-term borrowings reached 334 million yuan. Under these circumstances, finding nearly 600 million yuan to repay the funds seems a daunting challenge.

Local Governments Settle Accounts After the Tide Recedes

*ST Mubang is not the first photovoltaic company to receive a "repayment notice." In September 2022, Yijing Optoelectronics signed an agreement with Quanjiao County in Anhui Province to invest over 10 billion yuan in photovoltaic projects. The first phase—a 10GW high-efficiency N-type TOPCon cell project—required approximately 5 billion yuan, while the second and third phases for slicing and modules totaled around 5.3 billion yuan. To facilitate the project, the local government established a dedicated task force and allocated land, factory buildings, electricity, and wastewater treatment expansion resources. However, as the industry downturn set in, Phase I production was halted after October 2024, and subsequent phases were never launched. In December 2025, the Quanjiao Economic Development Zone Management Committee issued a hearing notice to Yijing Optoelectronics and its subsidiaries, proposing to terminate the agreement and recover funds. According to subsequent disclosures, as of the end of 2025, *ST Yijing had confirmed obligations of approximately 1.587 billion yuan for agency construction and support funds.

A similar story unfolded at Bangjie Shares, known as the "seamless apparel leader." At the end of 2022, the company announced plans to build a 10GW high-efficiency photovoltaic cell project. However, after production began, its core subsidiary fell into losses, and the project was ultimately shut down in 2025. Earlier this year, the Yangzhou Economic Development Zone Management Committee filed a lawsuit demanding Bangjie Shares return 140 million yuan in equipment subsidy funds. The parties subsequently reached a mediation agreement, requiring the company to repay the money by September 30. Looking back, most stalled projects emerged around 2022. At that time, the industry was booming with strong demand, and photovoltaic technology was easily replicable. Many cross-industry entrants flocked in, quickly reaping substantial profits. *ST Mubang entered with the same mindset. Although it claimed to be a "toy industry leader," before entering the photovoltaic sector, the company's book cash at the end of 2021 was less than 150 million yuan, with total net assets of only 945 million yuan. In 2022, the company completed the acquisition of Haoan Energy through a private placement. But subsequent investments in the photovoltaic business kept pushing up debt pressure—in the very year of the acquisition, *ST Mubang's debt-to-asset ratio rose by more than 66 percentage points.

After that, the company's business shifted decisively toward photovoltaics. By the first half of 2026, revenue from its toy segment had fallen to just 13.9084 million yuan, accounting for less than 9% of total revenue of 168 million yuan. Moreover, the segment posted a net loss of -19.54 million yuan with negative gross margins in the first half, providing no earnings support and ultimately bleeding alongside the core photovoltaic business.

Lessons from the Trough

Today, the photovoltaic industry has shifted from competing on capacity expansion to competing on delivery and quality. Similarly, local government investment promotion strategies are transitioning from "scale priority" to "performance priority." For enterprises, subsidies, land, and even investment agreements cannot replace orders and profits. Whether technology can achieve mass production, and whether products can be sold profitably, are the key determinants of project continuity. For local governments, investment promotion cannot be judged by numbers and concepts alone. Whether projects are built on schedule, commence production, and fulfill commitments after signing is what truly measures success.