PolicyMakers Continue To Trim Solar Export Incentives In China

By Saur News Bureau/ Updated On Mon, Nov 18th, 2024

Highlights :

The efforts are more an acknowledgement of the clear dominance of top Chinese solar firms, than anything else.
Of course, with trade battled looming over tariffs and other protection measures against Chinese imports, reducing or removing overt incentives will make a stronger case for China as well

PolicyMakers Continue To Trim Solar Export Incentives In China

China’ has chosen to include solar products in a move to reduce or even cancel an export tax rebate for its domestic firms. While the amount is relatively small, a reduction from 13 to 9 percent, it does send a strong signal that the government is done with incentives for the sector, which is dominant globally now. In fact, it might even indicate a willingness by decision makers to allow a few PV firms to exit the market, as the relative strengths of the top 6-8 firms remain strong even after a year of thin to negative margins.

With enough domestic solar manufacturing capacity and a significant part of future capacities even by the largest firms to be set up outide China, particularly the US, the government move is not as surprising as it seems.

The new changes, effective December 1 based on a notification from the Ministry of Finance and State Taxation Administration also covers the cancellation of export tax rebate rate for aluminum and copper products. Interestingly, the slight rise in prices that could be caused by the withdrawal of incentives could actually put further pressure on firms depending on Chinese imports to build value added products. Like those importing cells to assemble modules

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China’s export tax rebate policy was launched in 1985 to refund companies indirect taxes paid during the production and distribution of export goods, helping increase their international competitiveness. PV products were included in the policy as far back as 2003, when today’s global dominance was probably not even an idea in the minds of state planners.

According to the IEA, in 2023, China’s PV makers exported 70.3 gigawatts of silicon wafers, 39.3 GW of solar cells, and 211.7 GW of PV modules. This accounted for over 80% of the global market. The numbers have sustained in the first half of 2024 as well, even as some moderation is expected in H2 of the year, thanks to high inventory levels in key markets like the US and Europe, besides a higher share for domestic manufacturers in India.