China has announced it will lower the export tax rebate rate for solar photovoltaic products and batteries from 13% to 9% starting December 1, 2024. It also eliminates export tax rebates for aluminum and copper.

The announcement was jointly made by China’s Ministry of Finance and the State Taxation Administration.

This taxation intervention aims to address global concerns over overcapacity in its renewable energy sector, a factor contributing to escalating trade tensions.

The measure seeks to curb aggressive low-price competition and unchecked industry expansion by raising costs for manufacturers and export prices.

The elimination of export tax rebates on aluminum and copper, which are also used in the renewable energy industry, has already increased the prices of these metals. The reduction in export incentives could also impact solar PV and batteries.

China’s export tax rebate system was introduced in April 1985 to encourage exports by refunding indirect taxes paid during the production and distribution of export goods. This policy aimed to enhance the competitiveness of Chinese exports in international markets and align with global trade practices like those under the WTO framework. Solar photovoltaic products were included under this system in 2003.

Recently, the U.S. Department of Commerce imposed anti-dumping duties at rates ranging from 2.02% to 376.85% and countervailing duties at rates ranging from 1.44% to 168.81% on aluminum extrusions imported from 14 countries, including China.

In May 2024, the Department of Commerce made a preliminary ruling indicating that these aluminum extrusions were being sold in the U.S. at unfairly low prices, potentially subjecting them to anti-dumping duties. The investigation examined trade activity from October 1, 2022, to September 30, 2023, and was initiated on behalf of the U.S. Aluminum Extruders Coalition, representing 14 U.S.-based aluminum extruders.

In July last year, the Ministry of Commerce of India announced an anti-dumping investigation by the Directorate General of Trade Remedies into the imported aluminum solar module frames from China.