SHANGHAI (Reuters) - China’s production of solar equipment rose rapidly in the first half of the year despite a decline in new project installations, with much of the surplus exported, an industry association said on Thursday.

FILE PHOTO: Workers inspect solar panels at a photovoltaic power station on a hill in Linyi, Shandong province, China August 11, 2018. REUTERS/Stringer/File Photo

China put less than 12 gigawatts of new solar power capacity into operation in the first half of 2019, down from 24 GW built over the same period last year, according to figures released by the China Photovoltaic Industry Association (CPIA).

Solar wafer production surged 26% over the same period to 63 GW, solar cell manufacturing rose 31% to 51 GW and module production grew 12% to 47 GW, the association said.

Total export earnings from the solar sector rose by a third to $10.6 billion in the first half, with wafer shipments exceeding the full-year total for 2018, said Wang Bohua, CPIA’s Vice-Chairman.

China’s major markets were in Europe, with deliveries to the Netherlands, Spain, Ukraine, Hungary, Germany and Belgium all increasing. Shipments to the United States fell to just 0.1% of total sales, Wang said.

Solar sales to the United States have been hard hit by tariffs amid the Sino-U.S. trade war. They fell more than 90% to just $31.4 million during 2018, then making up 0.24% of the total, according to CPIA data.

Despite the drop-off in domestic installations, China is expected to put more than 40 GW of new capacity into operation over the course of 2019, Wu Shengwu, an official with the country’s industry ministry, told CPIA’s annual meeting. China built 44.3 GW of new capacity last year, down from a record 53 GW in 2017.

“In the first half of 2019, the overseas market was the main driving force behind the maintenance of growth in China’s (solar) manufacturing,” CPIA quoted Wu as saying in a news release. “In the second half of the year ... the domestic market is expected to recover.”

However, China is starting to give priority to renewable power projects that do not require state subsidies, and Wu warned that profits in the sector would inevitably decline.

PV manufacturers also needed to put more emphasis on research and development to ensure a lead in cutting-edge and disruptive technologies to match the country’s industrial scale, he said.