China 's State Council, or cabinet, on Wednesday said it would promote consolidation in the domestic solar energy industry, as part of efforts to turn around a sector plagued by high debt.

The State Council will encourage mergers and acquisitions in the solar-energy industry, it said in a statement posted on the government's web portal. It didn't say how it would do so.

"The main problems include over-capacity, excessive dependence on foreign markets and broad operational difficulties," the State Council said.

The cabinet will also reduce government support and ban local governments from supporting failing domestic solar companies, it added. It plans to strictly control the expansion of new projects to manufacture polysilicon and solar panels, promote electricity price reform, encourage the use of independent solar-powered generators and make adjustments to the electricity feed-in tariff, among other new policies.

Chinese solar companies accumulated heavy debt between 2009 and 2011 to fund their capacity expansion, but a market downturn left them struggling to make interest payments, and support from local banks as well as provincial governments that rely on the companies for tax revenue, employment and economic growth, have helped carry the weight of the debt.

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