Growing demand for solar panels in 2013 has led to rising margins for most Chinese solar manufacturers. But not every company is faring as well as others. Here are three Chinese solar stocks to avoid in 2014, even as the market improves.

LDK Solar
If it wasn't bad enough that LDK Solar (NYSE: LDK) reported just $156.6 million in sales last quarter, reported a $127.0 million loss, and has $2.8 billion in debt -- the company can't even pay its bills. Last week, management offered $0.20 on the dollar for dollar denominated debt and hasn't made interest payments on those bonds due last August.  

It's inconceivable how LDK Solar could grow enough to get out of that much debt and return any cash to shareholders. The company took a huge gamble loading up on debt to expand capacity and the gamble has been a failure and will continue to be for shareholders.

Yingli Green Energy
The problem with Yingli Green Energy (NYSE: YGE) begins and ends with debt. In fact, it's one of the more reputable manufacturers with a strong global brand, but the company still has $2.6 billion in debt hanging over it.

To put that debt into perspective, if we annualize Yingli's $43.8 million interest expense last quarter, the company would have to generate a $175.4 million operating profit just to break even (before taxes). Add in another $372 million in operating expenses and gross profit needs to be $547.3 million annually to break even. That would be about a 22% gross margin on $2.4 billion in revenue, which would be last quarter's revenue... times four.

It's certainly possible for Yingli Green Energy to swing to a profit because a 22% gross margin isn't unattainable from the 13.7% generated last quarter. But why not bet on a company like JinkoSolar, Trina Solar, or Canadian Solar instead, because their break even margin is much lower and profit upside is much higher. Plus, they have more ability to invest in the next generation of solar equipment when necessary, something Yingli may not have the balance sheet to do.

ReneSola
Like Yingli Green Energy, there are some things to like about ReneSola (SOL 6.29%). The company would have broken even last quarter if not for a $202.8 million impairment for a polysilicon expansion, but it's that execution risk that poses too much risk in 2014.

In last quarter's conference call, management admitted it didn't know when the Chinese government would pay subsidies supposedly due to utility scale projects built by companies like ReneSola.  Add that to the failed plant upgrade and an industry lagging 8.1% gross margin and you have a poor executing solar company.

Like Yingli Green Energy, this isn't a company I would take a risk on in 2014.

Chinese stocks you could buy
For as many risks as there are from these three stocks, there are some companies performing very well right now. JinkoSolar, Canadian Solar, and Trina Solar have all reported quarterly profits in 2013 and look poised to improve both their income statements and balance sheets in 2014. They're much safer bets as the solar industry improves than hoping that LDK Solar, Yingli Green Energy, or ReneSola can turn around bad balance sheets or struggling operations.