(Yicai) Jan. 12 -- China plans this year to remove export tax rebates for solar products and phase out those for batteries.

Value-added tax rebates on 249 exported products, including photovoltaic cells, will be withdrawn starting from April 1, the Ministry of Finance and the State Taxation Administration jointly announced on Jan. 9. VAT rebates on battery exports will fall to 6 percent from 9 percent between April 1 and Dec. 31, before being scrapped next year.

The move will bring overseas PV prices back to rational levels, ease trade friction risks and the national fiscal burden, as well as allow the government to better allocate its financial resources, the China Photovoltaic Industry Association said in an article released on the same day.

Overseas buyers will pile on the orders before the policy is cancelled, leading to a significant short-term increase in solar panel exports, Zheng Tianhong, a senior PV analyst at Shanghai Metals Market, told Yicai. Demand will likely slump by 5 percent to 10 percent afterwards, Zheng noted.

China extended its long-standing export tax rebate policy to cover solar products in 2013 to support the PV industry’s early growth. But as the industry has matured and competition has intensified, Chinese solar product prices have continued to decline, impacting overseas prices.

In light of this, China’s regulators have taken steps since 2024 to rectify cutthroat competition among PV firms and boost prices, first by lowering the VAT export rebates for PV and battery products to 9 percent from 13 percent in the December of that year.

Both sectors will face big challenges after the rebates are gone, but it will ultimately improve the domestic industrial structure, reduce "rat race" competition, and push companies to move into higher-end products and strengthen their global competitiveness, according to Ge Yuyu, an associate professor at Shanghai National Accounting Institute.

Editors: Dou Shicong, Martin Kadiev