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Reporting from McCall – here are some of the stories you wanted told.

How Did China Become The World's Dominant Polysilicon Producer?

LEILA FADEL, HOST:

You've probably been hearing about polysilicon recently. That's because in June, the U.S. government banned it from China's western region of Xinjiang over human rights concerns. It's the main material in solar panels, and nearly all of it comes from China. How did China become the world's dominant polysilicon producer? NPR's Emily Feng has been looking into this and brings us this story.

EMILY FENG, BYLINE: It was 2005, and Shi Zhengrong was flying high. He had founded China's first major solar panel company, Suntech, and it had just listed on the New York Stock Exchange. But he had a problem.

SHI ZHENGRONG: And, you know, we raised a lot of money, over $400 million. And with this cash, I thought I could buy polysilicon. They're all sold out.

FENG: There was a global polysilicon shortage. So Shi flew to the U.S., then the world's top producer. But this is what companies there said to him.

SHI: They say, OK, Dr. Shi, you have to prepay us. Then we expand our production facility, and we expand our production, you know, material maybe in a year or two

FENG: Businesses like Shi's could not wait that long. So incentivized by crazy-high prices, China began to create its own supply chain. And at the beginning, things were rough.

JENNY CHASE: The factories to make them were running full time. They were doing some pretty - sometimes pretty ridiculous things to make more silicon.

FENG: This is Jenny Chase, an analyst at research firm BloombergNEF. She says one idea Chinese makers had was to extract polysilicon out of a toxic waste product. But there was one small problem.

CHASE: A lot of companies didn't have the recycling, so they would - they were basically just dumping the silicon tetrachloride waste material in tanks and keeping them in hope of figuring out recycling in future. It was just wild.

FENG: So how did China get from hoarding vats of acid to leading the world in polysilicon production? Well, in 2006, it put out its 11th five-year economic plan. Solar executives around the world immediately took notice, including Mark Widmar, the CEO of First Solar, an American panel company. He noticed that...

MARK WIDMAR: Renewables and clean energy and solar in particular was going to be a strategic focus. You know, what happens from there is once the decision, the strategic decision is made, the machine goes into motion.

FENG: Here's how the machine went into motion. Chinese local governments began wooing startups to fill industrial parks, where they paid no taxes for the first three years and were offered land for free. Polysilicon was prioritized for public research funding, and state banks wrote loans for tens of millions of dollars to solar startups with no proven track record. Dozens of companies popped up.

MILAN NITZSCHKE: And nobody, simply nobody in the world was able to compete with that tremendous amount of state funding.

FENG: That's Milan Nitzschke, then an executive with one of the world's biggest solar panel makers, Germany's SolarWorld. But China had not yet cracked the code for how to make high-quality, cheap polysilicon. It's made with a complex, sometimes dangerous chemical method called the Siemens process. Solar expert Johannes Bernreuter explains.

JOHANNES BERNREUTER: Yeah, initially, it was a kind of secret recipe held by Western manufacturers.

FENG: Specifically manufacturers of polysilicon equipment. Here's Nitzschke.

NITZSCHKE: So there were in those days also German companies, manufacturing equipment OK, we can sell them simply anything. Whatever we can produce, we just send it to China. That's great. And that's what they did.

FENG: This was a mistake because selling the equipment meant also selling bits and pieces of the Siemens process. Here's Bernreuter again.

BERNREUTER: But as equipment suppliers and engineering companies provided the equipment and know-how to Chinese manufacturers, the secret sauce wasn't secret anymore.

FENG: One Chinese company benefited hugely from this - Daqo Group, or Daquan in Chinese. It made electrical gadgets, but it sensed a real fortune in solar, so it began trying to buy polysilicon know-how with no luck. Here's what Daqo Chairman Xu Guangfu wrote in a company blog from these days.

UNIDENTIFIED PERSON: (Reading) China has always wanted to import the most cutting-edge American, Japanese and German polysilicon manufacturing technology. But we always encountered international restrictions.

FENG: But in 2005, Daqo's chairman learned a European company was finally willing to help. And in August 2006, Daqo signed an exclusive technology transfer agreement for what Daqo calls the core of its expertise. And the next month, Daqo broke ground on its first major plant. NPR identified the previously unreported European company, Poly Engineering SRL, an Italian consultancy. Its founder, Dr Giovanni Marangoni, was once a director at an American silicon wafer maker. And he told NPR that he taught Daqo the polysilicon making know how and how to set up a plant. Marangoni wrote NPR in an email that without his support, Doqa would, quote, "not have been able to reach its current capacity." Today, Daqo is one of the world's biggest producers of solar polysilicon. And it's based in Xinjiang, a Western region that is perfect for the energy-intensive polysilicon industry. Here's entrepreneur Shi Xhengrong, who you heard at the beginning of this story.

SHI: The reason, for example, some companies have been built in the West is because they have a lot of cheap electricity. There's so much land, so much sunshine.

FENG: But Xinjiang is also where China has detained and arrested hundreds of thousands of Uyghurs, a Turkic minority. Government documents suggest some are then forced into government work programs, as well. So in June, the U.S. banned Xinjiang polysilicon from five companies, including from Daqo. That's made polysilicon, once the reason for U.S.-China industrial competition, now an ethical hot potato, as well. David Dunlap is vice president of a New Mexico solar installation company, BayWa r.e. Solar Systems. He's now trying to figure out how to detect whether a panel has Xinjiang polysilicon in it.

DAVID DUNLAP: So if the rules are it has to be third-party verified from the source but the Chinese company that is the source won't report that, then nobody is going to get a clean bill of health.

FENG: Which means there's no way to guarantee where that polysilicon is from, a huge headache and raising the question, can solar panel companies even buy it legally from some of the world's biggest polysilicon makers? So while China has come to dominate solar over the last decade, whether they can continue to do so is now in question. Emily Feng, NPR News, Shanghai.

(SOUNDBITE OF SYNTHETIC EPIPHANY'S "INVICTUS") Transcript provided by NPR, Copyright NPR.