But they have not done so to reduce CO2...
No. They don’t care about CO2. But they do care about the air pollution they’re choking on.
“But they have not done so to reduce CO2...”
I believe that China is installing a lot of solar panels largely to provide a market for its factories, so they can achieve some economies of scale. It is industrial planning on their part - an effort to use government subsidies to gain an advantage over competing manufacturers in other countries. They want to dominate the solar panel market.
In my opinion, the big flaw with their approach, is that they are subsidizing the production of a technology that is not yet worth the cost. Current solar panels need to be subsidized to compete with grid electricity - which is to say that it is not competitive. They are wasting part of the value of every dollar that they spend on a less efficient option - malinvestment.
If better nuclear, or fracking or something reduces grid electricity cost in 10 years, that will further weaken the return on investment for older generation solar panels, which usually plan on a 20 year return.
When solar technology matures to something truly cost competitive, it may well be a totally different production process, and the manufacturing capacity that they subsidized could be obsolete.