China will cancel value-added tax (VAT) export rebates for photovoltaic products starting April 1, a policy shift aimed at curbing overcompetition in two of its most dominant manufacturing sectors while potentially easing trade frictions with key partners, including Europe.
The Ministry of Finance, in a joint statement with the State Taxation Administration, said VAT export rebates for battery products will be reduced from 9% to 6% between April and December 2026, with full elimination scheduled for Jan. 1, 2027. Consumption-tax rebate rules for photovoltaic and battery products will remain unchanged.
The move reflects Beijing’s effort to scale back export incentives for solar panels and batteries, sectors where Chinese manufacturers dominate globally but face shrinking margins due to price competition and rising trade tensions.
The China Photovoltaic Industry Association said the changes could stabilize export prices and reduce trade risks. “Some exporters have used VAT rebates as indirect price discounts for overseas buyers, contributing to falling prices,” the association said. “Timely reduction or cancellation of export rebates can help restore rational foreign market pricing and reduce trade frictions.”
China previously lowered VAT rebates for photovoltaic productsfrom 13% to 9% in December 2024 as part of broader efforts to rein in overcapacity and deflationary price pressures. The latest decision extends this strategy amid growing concern over excessive competition in strategic manufacturing sectors.
Proposals released by the Communist Party Central Committee in October for China’s next five-year plan included measures to tackle overcompetition in the solar sector. Industry groups noted that the rebate system, while intended to boost exports, has sometimes undermined profits for domestic producers and affected the sector’s international reputation.
Analysts view the policy as a signal of confidence in China’s dominance of global solar and battery supply chains. “VAT exemptions increase competitiveness, but if you dominate the market, you no longer need them,” said Jacob Gunter, lead analyst, Mercator Institute for China Studies in Berlin.
China’s market share of global solar photovoltaic production remains high. In 2024, the country accounted for 78% of global module production, 87% of solar cell output and 97% of wafer manufacturing, according to data from the International Energy Agency.
China remains the global leader in solar production, accounting for 78% of module output, 87% of solar cell production, and 97% of wafer manufacturing in 2024, according to the International Energy Agency. In batteries, six Chinese companies ranked among the top 10 global producers, capturing 68.9% of the market in the first ten months of 2025, according to SNE Research.
Analysts also note the move may signal goodwill to trading partners, particularly the European Union. “Beijing could be signaling its interest in serious trade relations and addressing trade imbalances,” said Holger Goerg, director at the Kiel Institute for the World Economy.
Alignment with International Standards
The policy shift coincides with China’s efforts to align industrial and corporate practices with international norms. In January, the Ministry of Finance launched the “Corporate Sustainable Disclosure Standard No. 1 – Climate (Trial),” aligned with the IFRS Foundation’s ISSB climate standard (IFRS S2). The framework emphasizes governance, strategy, risk and opportunity management, and metrics and targets, incorporating China’s domestic policy priorities.
The standard requires companies to report both financial risks from climate change and the environmental impact of their operations and value chains (double materiality). It mandates disclosure of greenhouse gas inventories (Scopes 1, 2, and eventually 3), climate scenario analyses, transition plans, and emissions reduction targets, supporting China’s goals of peaking carbon dioxide emissions before 2030 and achieving carbon neutrality by 2060.

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