China has cut the export tax credit for solar products, reduced tax refunds for Chinese PV exporters and eaten into their profit margins. The move could force some companies to raise export prices to mitigate potential financial losses.
China’s Ministry of Finance and Tax Authorities have announced a reduction in the export tax credit for photovoltaic products. From December 1, the discount for unassembled solar cells (HS code 85414200) and assembled PV modules (HS code 85414300) will drop from 13% to 9%.
The reduced rebate will reduce tax refunds for Chinese PV exporters, putting pressure on profit margins. Companies can respond by raising export prices to offset potential losses.
“While the reduced export rebates will have minimal impact on production costs for Chinese PV manufacturers, it is likely to provide support for prices abroad, contributing to a possible recovery,” said research firm Shanghai Metals Market (SMM). “However, whether prices will actually rise depends largely on the dynamics between supply and demand in the relevant regions.”
The adjustment follows a year of declining prices for PV products, driven by increased production capacity across the sector’s value chain. In October, domestic bid prices in China fell below CNY0.62 ($0.08)/W, which is widely considered below production costs.
To prevent further price drops and significant financial losses, the China Photovoltaic Industry Association (CPIA) organized a closed-door meeting in October with major PV manufacturers and state-owned energy companies.
They agreed on a “floor price” of CNY 0.68/W, with state power companies pledging to reject bids below this price in large-scale tenders, while manufacturers vowed not to underbid in domestic competitions.
Wang Shujuan, founder of Zhihui Photovoltaic, noted that the reduction in tax rebate supports the CPIA’s efforts to stabilize prices, especially in international markets.
Some industry analysts, who spoke pv magazine on condition of anonymity, said the reduction in the tax credit is part of a longer-term strategy.
With Chinese PV products dominating global markets, they said the government could eventually completely eliminate export tax rebates.
This shift could drive up international prices for PV modules while maintaining the profitability of China’s largest solar power producers.
“The cut from 13% to 9% may be just the beginning,” noted one analyst, highlighting the potential for further adjustments in the near future.
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