China will cancel or reduce tax rebates on hundreds of products in a move aimed at easing concerns over surging exports. The government said the measures are voluntary steps to reassure trade partners and address trade imbalances.
Starting April 1, value-added tax rebates will be removed for 249 products, including solar cells, ceramic roof tiles, and lithium hexafluorophosphate, the Ministry of Finance announced Friday. Additionally, rebate rates on 22 battery-related products, such as lithium-ion batteries, will fall from 9% to 6%, with full removal scheduled for January 1, 2027.
The tax rebate cuts come amid ongoing trade tensions with key partners, including the European Union, despite a recent tariff truce with the United States. China has already imposed some export controls on products such as steel and electric vehicles through licensing and other measures.
Michelle Lam, Greater China economist at Societe Generale, said Beijing’s efforts will help to address trade imbalances but may only have a limited effect. “It will help to some extent, though China’s trade surplus rise in recent years is still too large to ease trade partners’ concerns,” Lam said.
The rebate adjustments are designed to moderate the competitiveness of Chinese goods in global markets while signaling cooperation to trade partners worried about rapid export growth. Analysts say the move could slow the pace of shipments for certain high-demand products but is unlikely to drastically change China’s overall trade surplus.
China’s exports have grown rapidly in recent years, prompting concerns from global trading partners that the country’s trade surplus contributes to imbalances in world markets. By adjusting rebates, Beijing hopes to demonstrate its willingness to take corrective measures while maintaining export competitiveness for strategic goods.
Economists note that the reductions in rebates on battery and solar-related products align with global sustainability trends. By gradually phasing out incentives, China may also encourage domestic consumption and support the transition to higher-value manufacturing.
Industry observers say the phased approach—reducing rebates now and removing them completely in 2027—gives manufacturers time to adapt and plan for cost changes. Companies that rely heavily on VAT rebates may need to adjust pricing and supply chain strategies to remain competitive abroad.
The Ministry of Finance emphasized that the policy changes are part of a broader effort to maintain stable trade relationships and manage export growth responsibly. Officials say the adjustments will help moderate trade imbalances while continuing to support China’s industrial sectors.
The announcement signals that Beijing is actively engaging with global trade concerns. While the impact on overall exports may be gradual, the move reflects China’s strategic approach to balancing domestic economic interests with international pressures.
