This is one theoretical explanation. Another one, quite plausible, is that Chinese companies spent less on salaries, especially of management and company image, given very different "standards of life" between China and Germany, and just producing the damn things.)
The WaPo article does not present the defaulting on the debt and bankruptcy as a theory. Are you suggesting that lower salaries somehow led to default and bankruptcy?
Conveniently, the article also states that Suntech is the largest global seller of PV modules, undermining arguments that it is some sort of special case (if it's the largest on the planet, it must be the largest in China...).
Default is, probably, just part of a money stealing scheme, nothing special, it is same everywhere - get loads of government money and then bust - US, especially Russia, China - all the same.
The difference in so called "standard of living", however, is very simple thing. For example, uneducated people who making roads in Sweden receiving around 3k euro salary, while exactly the same job in, say, China is just to get food and rent. Similarly, German working class enjoys very high wages, which makes any "fair" competition with Asian cheap labor impossible. Then big companies employs tricks, such as assigning taxes for Chinese solar panels in EU, just to protect inflated wages of its working class. Actually all this is the very basics of micro-economy, so nothing to discuss here.
There's nothing theoretical about it. The Chinese government is completely blatant about it's interventions in it's economy. Subtle they are not. I say this as the spouse of a former Chinese citizen, with extended family over there in business and government.
