China recalibrates solar industry for long-term competitive strength

China's photovoltaic industry is poised to enter a higher phase of quality-oriented growth, driven by a strategic transition from a price-based competition to a paradigm in which leading enterprises leverage their core advantages in technology and scale to maintain global competitiveness, said industry experts.

As the sector prepares to bid farewell to export tax rebates, enterprises are accelerating their transformation and upgrading efforts, a move experts said will fortify the industry's resilience.

Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University, said that China's solar power industry is on the cusp of a historic transformation.

After years of rapid expansion fueled by policy support, the sector is making a strategic move that is expected to curb low-efficiency competition, reduce trade friction and steer the industry toward high-quality development, he said.

According to an announcement made by related government authorities earlier this year, the country will eliminate the value-added tax export rebate for photovoltaic products starting on April 1. The policy also stipulates a phased reduction for battery products, lowering the rebate rate from 9 percent to 6 percent, before completely phasing it out by Jan 1, 2027.

While the cancellation will inevitably increase export costs and compress profit margins in the short term, industry insiders see the move as a timely intervention to break the current deadlock of intense internal competition.

"The withdrawal of continuous tax dividends marks the moment for the Chinese photovoltaic industry to temper itself in the fire of pure market competition," said Liu Yiyang, executive secretary-general of the China Photovoltaic Industry Association.

As a global leader in solar technology, China boasts a complete manufacturing system where capacity and output in core chain links exceed 90 percent of the global total.

However, this dominance has come with challenges. Since 2024, the industry has faced a "volume up, price down" dilemma, in which fierce price wars at home have depressed export prices, eroding profits and leading to anti-subsidy investigations abroad.

The association believes that adjusting tax rebates will help rationalize export prices.

"Although not the only solution, removing rebates will inhibit the overly rapid decline in export prices in the long run, thereby lowering the probability of international trade friction," Liu said.

The move would also alleviate the country's fiscal burden, allowing for a more efficient allocation of resources, he added.

Wang Shijiang, deputy director of the electronic information department at the Ministry of Industry and Information Technology, emphasized that addressing industry involution is a top priority for 2026.

"The industry is currently in a deep adjustment period where deep-seated supply-demand mismatches remain unresolved," he said.

Market analysts predict a volatile but constructive adjustment period.

Liu, from the photovoltaic industry association, forecasts a "window period" surge in the first quarter of 2026, as overseas buyers rush to stock up before the policy takes effect. This, he said, is likely to be followed by a distinct drop in demand in the second quarter.

However, leading enterprises equipped with technological advantages, established channels and strong brands are expected to weather the storm, leading to higher industrial concentration, he noted.

"The policy will force a shift from a 'price war' to a 'value war'," Liu said. "Regardless of the total installed capacity, core competitiveness will now hinge on product quality, technological advancement and integrated solar-storage solutions."

Regarding the market scale, the association predicts that while 2026 may see a temporary dip, with domestic newly installed capacity estimated between 180 gigawatts and 240 GW, the sector will soon rebound.

By 2035, China's annual newly installed capacity is forecast to reach between 280 GW and 350 GW, it said.

Emerging concepts, such as space-based solar power, have also garnered attention recently. Liu, however, said these technologies are still in the early stages of verification.

If future commercial space launch capacity achieves significant breakthroughs and orbital delivery costs are further reduced, China's photovoltaic industry chain will encounter immense opportunities, he said.

zhengxin@chinadaily.com.cn