1. Change of strategy in China’s solar export policy

China is fundamentally changing its previous tax practice for photovoltaic exports. From April 2026, the VAT refunds previously granted for key solar industry products will no longer apply. The Chinese Ministry of Finance confirmed that wafers, solar cells and modules will in future be exported without tax incentives. A temporary transition is planned for battery products. The step marks a turning point for an industry that has benefited from fiscal advantages in international competition for years.

The decision is seen as a signal for a strategic realignment of industrial policy. Instead of an export-oriented volume strategy, greater emphasis should be placed on efficiency, technological performance and structural stability. International market participants expect adjustments in prices, supply chains and investment decisions.

2. New framework conditions for photovoltaic exports

Specifically, the new regulation stipulates that from April 1, 2026, VAT refunds will no longer be granted for photovoltaic products. Both preliminary products such as wafers and solar cells and finished products are affected Modules. Previously, manufacturers were able to reclaim all or part of the VAT paid when exporting, which significantly reduced the cost base and gave Chinese suppliers a competitive advantage.

With the elimination of these refunds, the calculation changes fundamentally. In the future, the unreimbursed tax will flow directly into the production and export costs. For manufacturers, this means reassessing their pricing strategies and margins. International buyers are likely to face greater cost adjustments, particularly for long-term supply contracts.

China is relying on a staggered phase-out for battery products. Between April and December 2026, the refund rate drops from nine to six percent. From January 2027, all tax advantages will no longer apply here either. This transition period is intended to enable companies to gradually adapt production and supply chains and restructure existing contracts.

3. Why China is changing course

The measure comes against the background of significantly increased production capacities and increasing tensions in international trade. Significant excess capacity has built up in the solar and battery industries in recent years, accompanied by intense price competition and falling margins. At the same time, Chinese exports increasingly became the focus of trade policy debates.

The government is responding to these structural challenges by abolishing export subsidies. The aim is to control competition less through state cost advantages and more through technological quality, efficiency and innovative strength. In the long term, the industry should become more stable and less dependent on fiscal stimulus.

4. The assessment of the economic experts

The announcement is interpreted in business and industry as a signal for a profound change of course. Experts expect that competitive conditions and business models of Chinese manufacturers will change noticeably.

Ge Yuyu, Associate Professor at the Shanghai National Accounting Institute, explains:

“The end of export tax advantages changes the logic of competition. Companies will have to compete more strongly on quality, technology and value creation.”

From the perspective of market observers, this assessment underlines that the Chinese solar industry will be able to rely less on government cost advantages in the future. Instead, the ability to innovate, efficiency and long-term positioning in global competition are becoming more of a focus.

5. Consequences for prices and supply chains

In the short term, market analysts expect pull-forward effects on exports. Manufacturers could try to process deliveries before the new regulation comes into force in order to avoid existing ones Tax benefits to use. However, such effects are likely to remain temporary and will not stop structural changes.

In the medium term, the cost structure of Chinese providers will change noticeably. Part of the additional burden could be passed on to international customers through higher prices, while other manufacturers are likely to try to increase efficiency potential or reduce margins.

6. Prospects for the international photovoltaics market

The loss of Chinese export subsidies represents a turning point for the global solar market. In the long term, competition could be more focused on quality and technological performance.

The decision is also likely to impact global supply chains. Buyers in Europe, the USA and other import markets could broaden their procurement strategies to reduce dependencies. At the same time, production locations outside of China potentially have new opportunities to position themselves in international competition and gain market share.