ECONOMY

Economists Urge Export Tax Rebate Cuts as Trade Surplus Hits Record

Published: May. 29, 2026 12:38 a.m. GMT+8

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A view of a terminal at Shanghai Port. Photo: VCG

Chinese researchers and policy advisers are calling for targeted cuts to export tax rebates after the country’s trade surplus reached a record $1.2 trillion in 2025, arguing the fiscal savings could be redirected to households and rural incomes.

The proposals highlight a growing debate over whether China should continue using broad-based tax relief to support exporters as the country’s manufacturing competitiveness strengthens, export rebate costs rise and trade tensions intensify.

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Record $1.2 trillion trade surplus in 2025 sparks calls to cut export tax rebates and redirect savings to households and rural incomes.
Export rebates totaled 2.1 trillion yuan ($309 billion) in 2025, the highest share of tax revenue on record.
Recent rebate cuts targeted aluminum, copper, and photovoltaic products amid overcapacity and trade tensions.

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Who’s Who

Huachuang Securities Co. Ltd.: Zhang Yu, chief economist at Huachuang Securities Co. Ltd., argued that China's export rebate policy should be reassessed during the 15th Five-Year Plan period due to shifting industrial competitiveness, suggesting targeted adjustments to create fiscal space.

PricewaterhouseCoopers China: A PricewaterhouseCoopers China report noted that actual export tax refund rates range from 0% to 13%, and many exporters cannot recover all input VAT costs due to specific calculation formulas.

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What Happened When

1985：: China introduced export tax rebates.

1994：: The export rebate system became more comprehensive after the nationwide rollout of value-added tax (VAT).

2008-2009：: China raised export rebate rates on some goods seven times following the global financial crisis.

2018-2019：: Beijing increased rebates for products including machinery and electronics to offset pressure from the China-U.S. trade dispute.

December 2024：: Export rebates for aluminum and copper processing products were eliminated.

End of 2024：: Export rebates for photovoltaic (PV) products were cut to 9% from 13%, and battery product rebates were reduced to 9%.

2024-2026：: Some industries faced significant rebate reductions, particularly in new-energy sectors.

2025：: China's trade surplus reached a record $1.2 trillion, and export rebates totaled 2.1 trillion yuan ($309 billion), equivalent to 12.1% of annual tax revenue.