(Yicai) Nov. 18 -- China’s move to lower or cancel the export tax rebate rate for certain products is expected to somewhat impact the domestic photovoltaic industry.

The adjustment to the export tax rebate policy will likely put additional cost pressure on PV companies, especially those with weaker technological capabilities or poor cost management, according to industry insiders. Such firms may struggle to remain competitive and face risks, including shrinking profit margins or market exit.

China will trim the export tax rebate rate for some refined oil, solar, and non-metallic mineral products, as well as batteries, to 9 percent from 13 percent from Dec. 1, the Ministry of Finance and State Taxation Administration jointly announced on Nov. 15. Moreover, the country will cancel the export tax rebate rate for aluminum and copper products and chemically modified animal, plant or microbial oils and fats.

“The move is expected to increase the overall PV production costs and affect the downstream segment as well,” an insider at a Chinese solar company told Yicai. “Firms will need to become more self-reliant to survive.”

However, the Shanghai Metals Market believes that the export tax rebate rate cut will only slightly impact solar companies’ overall manufacturing costs, while positively influencing their products’ overseas price positioning, potentially leading to a price rebound in markets with high demand and limited local supply.

Markets like Europe and the United States, which have high PV module inventories, have invested heavily in building local supply chains, which means that their dependence on Chinese solar products is gradually decreasing, said Wang Wenqi, an analyst at the SMM. Therefore, these markets may prioritize clearing inventories rather than importing from China.

China introduced the export tax rebate policy in 1985 to refund companies indirect taxes paid during the production and distribution of export goods, thus allowing them to go global tax-free and enhance their international competitiveness. PV products were included in the policy in 2003.

Last year, Chinese PV makers exported 70.3 gigawatts of silicon wafers, 39.3 GW of solar cells, and 211.7 GW of PV modules, accounting for more than 80 percent of the global market, according to data from the International Energy Agency.

Editor: Futura Costaglione