The past two weeks have seen the Chinese solar energy pioneer Suntech Power Holdings Co Ltd plunge into a downward spiral after revelations of questionable accounting, leaving the firm on the edge of financial collapse and its fate largely in the hands of Beijing.  But rather than rescue Suntech, Beijing should let the company collapse to send a message that it won't support companies that engage in such financial shenanigans.

Suntech was once one of China's brightest stars, making international headlines when it became the country's first solar panel maker to list overseas in 2005. But its woes began a year ago when the global solar sector started to suffer from massive oversupply that sent most major players into the red.

While the downturn wreaked havoc on everyone, Suntech's own woes grew considerably worse a couple of weeks ago when it disclosed that it may have been the victim of fraud that could leave it liable for guaranteeing a third-party loan worth over $600 million.

As the scandal unraveled, it became increasingly apparent that the company that allegedly defrauded Suntech, called GSF, was majority-owned by Suntech. Furthermore, it appeared that Suntech had been selling its panels to GSF for years at high prices and including the sales in its quarterly reports - a practice that may have been technically legal but was still highly misleading to investors.

These revelations have crushed Suntech's stock, which now trades at around $1 - far below its all-time high of more than $80 per share and well under its 2005 initial public offering price of $15.

Now the company is facing several investor lawsuits, and could soon be subject to an investigation by the US securities regulator. It also has more than $500 million in debt coming due early next year that it may not be able to repay.

With all those problems hovering over it, Suntech could have difficulties surviving much longer without financial support from Beijing. But the company has already caused so much damage that Beijing could send an important message to both Chinese companies and financial markets by refusing to provide such a lifeline.

At the most basic level, Suntech has already cost its own investors millions of dollars that they will probably never recover, partly due to its financial accounting tricks. More broadly, this new scandal will help to prolong a wider confidence crisis that has punished most overseas-listed Chinese stocks over the last year, causing many to lose half of their value or more due to a spat of similar accounting scandals.

Lastly, the US and Europe are accusing Beijing of unfairly subsidizing Suntech and other Chinese solar firms with policies like cheap financing that they could never get from commercial banks, so rescuing Suntech now would only help to confirm those accusations.

By letting Suntech fail, Beijing could send a loud message both to global investors and its own companies that it won't tolerate deceitful accounting practices, and also that it will stop unfairly supporting its focus industries by giving them special treatment unavailable to foreign rivals.

The author is a former company news reporter from Reuters. He writes about China's company news at www.youngchinabiz.com.