Policy overview — what changed and when

On January 8, China’s Ministry of Finance and the State Taxation Administration announced targeted adjustments to export VAT rebate policy affecting photovoltaic (PV) products and batteries. Key timing and scope:

• Photovoltaic products (PV modules, wafers, cells): VAT export rebate fully cancelled from April 1, 2026 (based on customs declaration date).
• Batteries (storage & cells): A transitional reduction — rebate lowered from 9% to 6% from April 1 to Dec 31, 2026; rebate fully cancelled from Jan 1, 2027.
• Exemptions: Certain items like inverters, PV production equipment and structural racking remain unchanged and continue to enjoy existing rebate rules. Consumption tax rules for specific battery types also remain intact.

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Why Beijing is doing this: policy logic for exporters

Three policy drivers matter for exporters setting medium-term strategy:

1. Stop fiscal leakage — rebates were effectively being priced into export bids, shifting domestic subsidy value to overseas buyers.
2. Reduce trade friction — lower rebate-driven subsidies help reduce anti-dumping and countervailing risk from major markets.
3. Force structural upgrade — the measure accelerates the exit of low-margin, low-tech players and promotes higher-efficiency technologies and service models.

How different exporters will feel the pain

1. Large, tech-leading PV manufacturers

Headlines: stronger pricing power and overseas capacity can buffer margin loss. Strategies available: pursue product premiuming (TOPCon, HJT, bifacial high-efficiency modules), use overseas factories to allocate volumes, and push integrated PV+storage solutions to protect ASP.

2. Mid-tier and small OEM/exporters

Expect acute pressure. With limited R&D and slimmer margins, many will face either exit or rapid pivot toward specialized niches (microinverters, mounting systems, BOS components) where rebates still apply or where domestic demand is strong.

3. Battery manufacturers

They gain a short runway in 2026 to restructure pricing and cost models. Battery exporters with higher value-add (storage systems, lifecycle services) can better absorb final elimination in 2027.

Actionable playbook for B2B exporters (90–540 day roadmap)

Product & R&D

• Prioritize high-efficiency modules (TOPCon/HJT) and system-level solutions. Target a 5–12% ASP uplift to offset rebate elimination.
• Shift SKU mix away from commodity modules; increase sales of exempt items (inverters, BOS) where feasible.

Market & commercial

• Accelerate local production in Southeast Asia/Mexico to preserve competitiveness and reduce reliance on domestic rebates.
• Reprice with segmented contracts — lock advanced customers into long-term agreements with volume/price bands.
• Push to new markets (MENA, East Africa, Latin America) where demand is growing and trade investigations are less mature.

Operations, tax & finance

• Tax planning: ensure correct HS code classification and maximize available consumption tax refunds; update customs workflows.
• Cashflow: prioritize export declarations before April 1, 2026 for eligible shipments and manage inventory to avoid post-policy markdowns.
• Cost engineering: target 3–8% unit cost reduction via yield improvements, energy optimization and supplier renegotiation during 2026.

KPIs and implementation — measurable targets

Set short, mid and long-term KPIs to track transformation:

• 90 days: HS-code audit completed; export pipeline prioritized for early declarations; 100% of at-risk shipments identified.
• 180 days: Cost-saving initiatives underway targeting ≥3% unit cost reduction; 30% of export portfolio re-priced to premium segments.
• 12–24 months: Overseas capacity plan or local JV approved; revenue mix shifted to >25% non-module exports (inverters, BOS, services).