China will begin phasing out value-added tax export rebates for photovoltaic products from April 1, the finance ministry announced in a joint statement with the State Taxation Administration on Friday.

Export rebates for battery products will be cut from 9 percent to 6 percent between April and December, before being fully scrapped from Jan 1, 2027.

The move follows an earlier policy shift announced in November 2024, when China lowered export rebate rates for solar wafers, cells and modules from 13 percent to 9 percent.

The China Photovoltaic Industry Association (CPIA) said the policy aims to correct distortions that have emerged in overseas markets, where intense competition and falling prices have eroded profitability for Chinese firms and increased exposure to trade disputes.

"Since 2024, China's photovoltaic exports have shown a pattern of rising volumes but declining prices," a statement from the association read.

"In some cases, export rebates have been factored directly into overseas price negotiations, effectively transferring fiscal resources to foreign buyers."

According to the CPIA, such practices weakened the intended role of export rebates as a mechanism to offset domestic VAT burdens, while increasing the risk of anti-dumping and countervailing investigations against Chinese products.

By lowering and eventually removing rebates, the association said, overseas market prices are expected to better reflect production costs and technological value, helping to reduce trade friction and promote healthier competition.

China is the world's largest producer and exporter of solar equipment, meeting the bulk of global demand as many countries accelerate energy transition efforts. Industry experts argue that a more market-oriented export pricing mechanism will strengthen the sector's long-term competitiveness and international credibility.

The CPIA added that the policy shift would ease pressure on public finances and help support more efficient allocation of fiscal resources, aligning with Beijing's broader push to guide strategic industries away from price-led expansion toward innovation-driven growth.