April 3, 2026 – Effective April 1, 2026, China has eliminated export tax rebates for all 249 PV product categories and reduced the rebate rate for lithium battery and energy storage products to 6%, with a complete phase-out scheduled for 2027. The policy, which began in 2013 when China introduced a 50% VAT refund to help PV manufacturers weather EU and US anti-dumping probes, has now reached a historic turning point.
In recent years, some PV firms have engaged in cutthroat price wars, using export rebates as bargaining chips to undercut overseas buyers—a practice known as "involution externalization," where domestic fiscal subsidies effectively end up benefiting foreign markets. The policy withdrawal is widely seen as a decisive move to address "involution-style" competition in the new energy sector.
"The elimination of rebates essentially closes the channel for subsidy-driven low-price competition," said an industry insider. Small and mid-sized enterprises that relied on rebates to sustain razor-thin margins will face acute pressure, while inefficient and technology-lagging capacity will be forced out of the market. On March 30, China's State Administration for Market Regulation issued a notice specifically targeting "involution-style" competition in key sectors including PV, lithium batteries, and new energy vehicles.
Chen Haisheng, director of the Institute of Engineering Thermophysics at the Chinese Academy of Sciences, noted that "involution externalization" has eroded corporate profits and R&D investment—even if firms capture market share in the short term, long-term innovation capacity suffers. Yang Rui, chairman of Shuangdeng Group, called for three strategic shifts: from competing on price to competing on capability, from export-oriented thinking to localization thinking, and from cyclical industries to new infrastructure development.
In the short term, cost pressures are set to intensify—industry estimates suggest that eliminating the 9% rebate would reduce profit by 46 to 51 yuan per module. Over the longer term, however, the policy aims to push companies away from price-based advantages and toward technology leadership and global capacity deployment. China's new energy industry is undergoing a profound transition from "price warfare" to "value reconstruction," with safety performance, scenario-specific solutions, and lifecycle service capabilities emerging as new core competitive differentiators.