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# What triggered China to slash export rebates on EVs and other vehicles?
- URL: https://asia-tech-news.ghost.io/china-pulls-export-rebates-from-industries-caught-in-price-wars/
- Published: 2026-10-23T08:11:00.000Z
- Updated: 2026-10-23T08:10:59.000Z
- Description: China paid out about US$300 billion in export tax rebates in 2025.
- Author: Cbot Crew
- Tags: Industrial policy, Export controls & trade, Electric vehicles, Batteries & energy storage, Ministry of Finance, State Taxation Administration, Li Xianzhong, China Photovoltaic Industry Association, Cui Dongshu, China Passenger Car Association, InfoLink Consulting, China Association of Automobile Manufacturers, #analysis, #edibot, #edibot-changed

China is on track to cut the export tax rebate on electric and plug-in hybrid vehicles (what China calls new-energy vehicles) from 13% to 9% on April 1, 2027\. The [Ministry of Finance](https://www.mof.gov.cn/?ref=asia-tech-news.ghost.io) (财政部) and the [State Taxation Administration](https://www.chinatax.gov.cn/?ref=asia-tech-news.ghost.io) (税务总局) announced the cut in an [Oct. 12 notice](https://szs.mof.gov.cn/zhengcefabu/202610/t20261012%5F4002592.htm?ref=asia-tech-news.ghost.io). It covers 67 tariff lines, 58 of them passenger cars, as well as [electric trucks and buses](https://asia-tech-news.ghost.io/chinas-latest-export-rebate-cut-hits-electric-trucks-and-buses/).

An export rebate refunds the value-added tax charged as goods are made. A 13% rebate matches the top tax rate, so exporters get all of that tax back, and a cut leaves the rest as their cost.

So why the cuts? Our review of 18 rebate notices from 2007 to 2026, plus export and spending data, finds a pattern: since 2024 the cuts have centered on industries that export at great scale and are caught in price wars, first solar and batteries and now electric and plug-in hybrid vehicles.

## Two decades of raises and cuts

During the 2008-09 financial crisis, Beijing raised rebates on goods from textiles and toys to industrial robots. They rose again in 2018 and 2020.

But China also institutes regular cuts. After cuts in 2007 and 2010, the current run began in 2021, when some steel products lost their rebates in two rounds. In [December 2024](https://szs.mof.gov.cn/zhengcefabu/202411/t20241115%5F3947628.htm?ref=asia-tech-news.ghost.io), aluminum and copper products lost their rebates, and solar products and batteries dropped from 13% to 9%. In [April 2026](https://szs.mof.gov.cn/zhengcefabu/202601/t20260109%5F3981637.htm?ref=asia-tech-news.ghost.io), solar products and some 240 other items, from battery chemicals to glass, lost theirs. Batteries fell to 6% and will get nothing beginning in January of next year.

## Official line vs. the industry view

At a Jan. 20, 2026, press briefing, Li Xianzhong (李先忠), a department director at the Finance Ministry, gave reasons for the solar and battery cuts. The change "helps promote the efficient use of resources" and reduces pollution and carbon emissions, he said, according to the [ministry's transcript](https://www.mof.gov.cn/zhengwuxinxi/caizhengxinwen/202601/t20260120%5F3982255.htm?ref=asia-tech-news.ghost.io). It would also help tackle "involution-style" competition, he said, using the official term for cutthroat price wars that start at home and spill into export markets. However, Li didn't mention trade, which the question put to him had raised. We found no explanation of the vehicle cut from either agency through Oct. 20.

Some solar exporters had turned the rebate into room to bargain with foreign buyers, the [China Photovoltaic Industry Association](https://www.chinapv.org.cn/?ref=asia-tech-news.ghost.io) (中国光伏行业协会) said in a January statement, [the 21st Century Business Herald (21世纪经济报道) reported](https://m.sfccn.com/2026/1-9/5MMDE0MDdfMjA5NTQ5Mw.html?ref=asia-tech-news.ghost.io). In effect, the rebate had become a subsidy for overseas markets and raised the risk of anti-subsidy and anti-dumping cases in foreign markets, the association said. For cars, the cut is policy "returning to neutral" after the industry matured, Cui Dongshu (崔东树), head of the China Passenger Car Association (乘联分会), [told Yicai](https://www.yicai.com/news/103390723.html?ref=asia-tech-news.ghost.io) (第一财经).

## What happens when rebates are slashed?

The first solar and battery cuts, in December 2024, came while export earnings in both industries were falling. Solar export values fell 34.5% in the first 10 months of 2024 and another 13.2%, to US$24.4 billion, in the same months of 2025, according to the solar association's figures [reported by Yicai](https://www.yicai.com/news/102997101.html?ref=asia-tech-news.ghost.io). 

Nor have exports collapsed since. Lithium-ion battery exports, which fell in 2024, rose 36.4% in the first nine months of 2026, even with the battery rebate down to 6% since April, according to customs figures [reported by Xinhua](https://www.news.cn/fortune/20261014/9248a005dd40443180bb37bf4906af59/c.html?ref=asia-tech-news.ghost.io). Solar module exports hit 37.3 gigawatts in March 2026, in a rush before the rebate ended, and fell to 14.1 gigawatts in May. Shipments for the first half were still level with a year earlier, 128.2 gigawatts against 127.3, according to customs data compiled by Taipei-based [InfoLink Consulting](https://www.infolink-group.com/?ref=asia-tech-news.ghost.io) ([May](https://www.infolink-group.com/energy-article/solar-topic-china-pv-module-cell-exports-may-2026?ref=asia-tech-news.ghost.io) and [June](https://www.infolink-group.com/energy-article/solar-topic-june-2026-china-pv-exports?ref=asia-tech-news.ghost.io) reports). China exported 3.4 million electric and plug-in hybrid vehicles in the first eight months of 2026, more than in all of 2025 (2.6 million), according to the [China Association of Automobile Manufacturers](http://www.caam.org.cn/chn/4/cate%5F32/con%5F5237333.html?ref=asia-tech-news.ghost.io) (中国汽车工业协会).

The rebate bill, meanwhile, has risen every year since 2022\. China paid out 2.13 trillion yuan (about US$300 billion) in export tax rebates in 2025, the most in the eight years of [Finance Ministry figures](https://gks.mof.gov.cn/tongjishuju/202601/t20260130%5F3982923.htm?ref=asia-tech-news.ghost.io) we checked and, by our calculation, about a third more than in 2018.

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