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According to an SMM survey, current export quotations for photovoltaic (PV) modules fluctuate between $0.09 and $0.13 per watt. Behind this price movement lies the impact of adjustments to China’s export tax rebate policy, signaling a structural shift in the country’s PV industry from price-driven competition toward value-based competition.
Rebate Cancellation Confirmed
At a press conference held by the State Council Information Office on January 20, Li Xianzhong, Director-General of the Department of Comprehensive Affairs at the Ministry of Finance, addressed the policy decision to cancel export tax rebates for PV and related products. He noted that the adjustment, following a prior reduction in the rebate rate in December 2024, reflects further policy calibration based on China’s domestic conditions.
According to a joint announcement released by the Ministry of Finance and the State Taxation Administration on the evening of January 9:
Export Value-Added Tax (VAT) rebates for PV and related products will be fully canceled effective April 1, 2026.
From April 1, 2026, to December 31, 2026, the export VAT rebate rate for solar cell products will be reduced from 9 percent to 6 percent.
Export VAT rebates for solar cell products will be completely abolished starting January 1, 2027.
This represents the first full elimination of export VAT rebates for major PV products since the sector was incorporated into China’s rebate policy framework.
Policy Context
The adjustment is expected to have a profound impact on China’s PV sector. At the press conference, Li Xianzhong stated that the move “is conducive to guiding the rational adjustment of industrial structure, promoting industrial transformation and upgrading, and comprehensively curbing vicious internal competition.”
China’s PV export tax rebate policy dates back to 2013, when companies were eligible for VAT rebate rates of up to 50 percent. As the industry matured, the rate was gradually reduced, falling from 13 percent to 9 percent by November 2024.
In a document released on January 8, the China Photovoltaic Industry Association (CPIA) noted that the export rebate policy had effectively evolved into a subsidy for overseas end-markets. This dynamic not only eroded profitability for domestic manufacturers but also heightened exposure to international trade frictions.
Short-Term Market Reaction
Market responses to the policy announcement were swift. According to SMM’s survey, module manufacturers have broadly raised export quotations, with prices climbing into the $0.09–$0.13 per watt range, compared with $0.087 per watt reported on January 7.
Despite this, a sharp price spike driven solely by rebate cancellation has not yet materialized. Industry observers suggest that an export peak may occur between January and March 2026, as companies accelerate shipments to secure rebates during the final effective window.
Since January 2026, a wave of price adjustments led by major manufacturers has emerged. Trina Solar announced two price increases within half a month, raising the price of mid-size modules by $0.03 per watt from a previous range of $0.82–$0.86. Other leading producers, including LONGi Green Energy and JA Solar, followed with similar adjustments, largely offsetting the direct cost impact of rebate removal.
Impact on Overseas Markets
The cancellation of export rebates is expected to raise PV module costs by roughly 9 percent, translating into an estimated 2.25 percentage point reduction in the internal rate of return (IRR) for overseas solar projects. In markets such as Greece, where project IRRs already hover around 6 percent or lower, such a decline could render many investments economically unviable, potentially causing certain regional markets to contract sharply.
In recent years, intense domestic competition pushed export module prices into a prolonged downward trend, stabilizing around $0.085–$0.087 per watt in the European market. These ultra-low prices underpinned demand growth in regions that were previously marginal from an economic standpoint.
However, a representative from a PV company observed that the existing rebate mechanism largely subsidized overseas users. According to the company, Chinese PV manufacturers retain strong competitiveness even without such policy support, and many leading firms have embedded price-adjustment mechanisms into long-term customer contracts to absorb the impact of rebate removal.
Corporate Response Strategies
Enterprises of different scales are responding differently to the policy shift. Industry insiders note that small and medium-sized module manufacturers face stronger incentives to accelerate exports. These firms often depend heavily on rebates to sustain margins and typically operate with a narrow customer base, leaving them more exposed to volatility.
By contrast, leading enterprises display greater strategic flexibility. One executive indicated that many large PV companies have already established overseas manufacturing facilities. For these players, the cancellation of export rebates may actually reinforce earlier investments abroad. At the same time, higher overseas prices could create tensions between domestic and international supply allocation, potentially delaying domestic deliveries.
SMM data suggest that domestic production schedules have not rebounded sharply in anticipation of the policy change. Most manufacturers continue to follow demand-driven inventory strategies, with no widespread evidence of centralized procurement or aggressive rush exports.
Industry Restructuring Intensifies
CPIA has noted that since 2024, China’s PV products have faced increasingly unhealthy competition in overseas markets, characterized by declining export prices and a pattern of “volume growth accompanied by price erosion.” In some cases, companies leveraged export rebates as bargaining tools in overseas negotiations, effectively transferring fiscal resources intended to offset domestic VAT burdens to foreign buyers.
The rebate cancellation is expected to accelerate industry consolidation, driving the exit of outdated capacity and concentrating resources among leading enterprises. For SMEs that have long relied on rebates and low-price bidding strategies, the policy shift directly undermines their profit model. While short-term rush exports may occur, firms lacking pricing power or technological differentiation are likely to face margin collapse once the transition period ends, increasing the likelihood of market exit or acquisition.
CITIC Securities noted in a research report that PV and energy storage companies will face short-term pressure from rising export costs and declining margins. During the policy window, a temporary surge in module shipments is expected, but SMM estimates that export volumes could decline by 5 percent to 10 percent once the new regime takes full effect.
More symbolically, a shift in market perception is underway. When industry leaders such as LONGi and Trina Solar initiate price increases, when European module prices rebound from the $0.085 per watt floor, and when global buyers begin to accept that Chinese PV products warrant reasonable profit margins, the policy adjustment extends beyond simple cost pass-through.
The export rebate reform signals that China’s PV industry is moving away from entrenched low-price competition. Enterprises that once sold products overseas at near-cost levels are now reassessing pricing strategies, with future competitiveness increasingly anchored in technological leadership and globalized manufacturing footprints. While the transition may impose short-term strain, it lays the groundwork for a more sustainable and resilient development trajectory for China’s PV sector.