China to Reduce Export Tax Rebates for Solar PV Products

China's PV export tax rebate cuts are set to impact the global solar market, likely driving up costs for overseas buyers amid supply chain shifts and local manufacturing efforts.

November 19, 2024. By Abha Rustagi

The Ministry of Finance and the State Administration of Taxation of China have announced a reduction in export tax rebates for photovoltaic (PV) products.

As announced, there will be a series of adjustments to export tax rebates effective from December 1, 2024: rebates on aluminum and copper semis and some chemically modified oils and fats will be eliminated, while rebates on specific refined oils, batteries photovoltaic (PV) products, and some non-metallic minerals will fall from 13 to 9 percent.

Both non-module-mounted solar cells (commodity code 85414200) and module-mounted ones (commodity code 85414300) will see adjustment. This adjustment comes at a time when the dominant global PV industry of China is facing challenges due to uneven supply and demand resulting in falling export prices.

China's PV sector accounts for over 80 percent of the world's PV product demand with almost half of the industry's sales reliant on overseas markets. This announcement comes at a time when PV module prices have dipped to as low as USD 0.08-0.09 per watt in large parts of the world, further undercutting the profitability of Chinese manufacturers.

Some analysts feel a reduction in export tax rebates will most likely raise production costs for the PV producers hailing from the country, who will likely pass these costs right onto international buyers. "Although the reduction in the export rebate rate will increase the export costs of PV producers, after the policy takes effect in December, the increased costs may be more likely to be passed on to overseas consumers," said research firm Shanghai Metals Market (SMM). This would, therefore, translate into a modest price increase for PV products in foreign markets.

The two main markets for Chinese PV products, Europe, and the USA are currently experiencing high inventories amid an active move towards solar supply chain localisation. This may lead to a short-term reduction in the exports to these markets as they deplete their current inventories while adopting local manufacturing strategies.

On the contrary, markets witnessing considerable demand growth combined with limited local supply are expected to be reliant on Chinese PV modules, thus providing some scope for price recovery in those markets.

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