For some time now, we’ve seen American solar panel manufacturers struggle to keep costs low enough to compete with their Chinese and Japanese counterparts. Last year, Massachusetts-based Evergreen Solar (NASDAQ: ESLR) had to move solar panel assembly to China (though retaining its manufacturing facility not far from Boston) in order to cut back on costs and please investors. But there has still been a certain sense of complacency about our R&D leadership: after all, industry mover and shaker First Solar (NASDAQ: FSLR) started out in Tempe, Arizona, and high tech solar products under development at research institutions like MIT get a lot of press.

But our complacency may be cloaking a a stagnating sector. We may be getting outpaced not just in manufacturing, but in R&D, a growing concern in the industry voiced today in  an article in the New York Times. Author Keith Bradsher writes about the first instance of a US solar company’s CTO making the move to China. Silicon Valley-based Applied Materials is moving some of its operations to China. The Chinese government’s generous financial concession have made it possible for the California solar component supplier to build what may be the world’s most cutting-edge solar research laboratories.

The CTO in question, Charles Pinto, says that Applied Materials isn’t giving up on America, but that China is (a) where the energy needs are, and (b) where the support is. The new labs are staggeringly huge–each bigger than two football fields.

Now, Mr. Pinto said, researchers from the United States and Europe have to be ready to move to China if they want to do cutting-edge work on solar manufacturing because the new Applied Materials complex here is the only research center that can fit an entire solar panel assembly line.

“If you really want to have an impact on this field, this is just such a tremendous laboratory,” he said.

Pinto’s obviously a little bit biased–one imagines it’s still possible to do cutting-edge work without these labs–but the mechanics behind the lab are what’s important. Why set up in China and not in the Mojave? Or Detroit? Because China is willing to put its money where its mouth is:

Locally, the Xi’an city government sold a 75-year land lease to Applied Materials at a deep discount and is reimbursing the company for roughly a quarter of the lab complex’s operating costs for five years, said Gang Zou, the site’s general manager.

Despite President Obama’s strong pushes for clean energy development, it’s still difficult to make projects cost competitive here. Cheap skilled labor combined with a national government desperate to solve the energy crisis it sees coming over the next few decades have combined to make a fertile field for expensive solar energy R&D and manufacture.

US solar companies are going to have to fight pretty hard to hang on to any kind of leadership position; yes, Applied Materials is still technically a US-based company, but what enormous employment, growth, and prestige potential just got bought by China? In this vicious economy, it’s going to be more difficult than ever to keep this kind of development on home soil, but simultaneously, it’s a time when creating (or retaining) American jobs is of the utmost importance. The problem is that someone has to foot that bill–and that’s something that in this country, we seem to have a hard time wrapping our heads around. We’d better figure it out soon. In the meantime, don’t act surprised as more talent and more jobs keep slipping offshore.