After China lowered the export tax rebate rate for photovoltaics and batteries from 13% to 9% at the end of 2024, the Ministry of Finance and the State Administration of Taxation issued the “Announcement on Adjusting the Export Tax Rebate Policy for Photovoltaic and Other Products” (hereinafter referred to as the “Announcement”) on January 9, deciding to cancel the value-added tax (VAT) export rebates for photovoltaic and other products starting from April 1, 2026. From April 1, 2026, to December 31, 2026, the VAT export rebate rate for batteries will be reduced from 9% to 6%; starting January 1, 2027, the VAT export rebate for batteries will be canceled. The so-called export rebate means returning the VAT and consumption tax already levied during the production and circulation stages before export to the exporting enterprises. The origin of this policy also stems from the abolition of foreign trade monopoly (all foreign exchange received by local governments and state-owned enterprises must be fully remitted to the central government for unified allocation, and most imports also require approval at the central government level). In 1984, reform of the foreign trade system allowed localities to retain a portion of foreign exchange for their own use and further adopted the reactionary policy of “buy rather than produce, rent rather than buy.” This result, even the reformist media of the Chinese revisionist regime openly admit:
[At that time, Hainan Island imported nearly 80,000 cars and 3 million TVs in one year, then resold them to the inland. At that time, China’s total foreign exchange was just over 8 billion USD. Hainan, a subordinate administrative region of Guangdong, spent 500 million USD. Among the 94 units directly under Hainan, 88 were involved in car smuggling, including schools and kindergartens leading the way. Additionally, Hainan imported large quantities of TVs, VCRs, motorcycles, etc. In 1985, China’s total car imports equaled the total imported from 1950 to 1979. The phenomenon of using policy to smuggle and import cars has always existed in Hainan and other places. From 1983 to 1987, local governments used foreign exchange to import cars in large quantities, reaching up to 16 billion USD, equivalent to two Chrysler companies in the United States.]
The bourgeoisie of the Chinese revisionist regime, in order to speculate and profiteer, squandered over 8 billion USD of China’s foreign exchange reserves until only over 2 billion USD remained by 1985. Therefore, in 1985, the Chinese revisionist regime introduced export rebate policies to stimulate foreign exchange earnings. Initially, subsidies were calculated based on the enterprise’s affiliation, but since most foreign exchange was remitted to the central government, the more exports, the greater the losses for local governments. After internal bureaucratic struggles among the bourgeoisie, subsidies were mainly borne by the central government, and local governments and bourgeoisie continued production even without profits due to subsidies. The bourgeois media called this “sucking the central government’s wool,” but ultimately, the taxes and subsidies still came from the labor of the people. The photovoltaic industry is an example of subsidies: in 2022, many bourgeoisie saw photovoltaic product prices rise and rushed into investments. By 2024, China’s photovoltaic exports increased by 13%, but total transaction volume fell by 33%, with prices dropping 60% compared to 2022, even leading to bizarre scenes where Chinese photovoltaic panels were used at home to repair fences in Europe. In 2023, China’s photovoltaic output value was nearly 1.4 trillion yuan, but in 2024, it dropped to 780 billion yuan. By the end of 2023, the total debt of 117 domestic A-share listed photovoltaic companies was nearly 1.98 trillion yuan, and by the end of March 2025, total liabilities had risen to 2.32 trillion yuan. Overproduction in the photovoltaic industry has led some local governments of the Chinese revisionist regime to struggle to maintain Keynesian subsidies: the former “number one photovoltaic stock” Yijing Photovoltaic reduced production and halted due to overcapacity; its Chuzhou photovoltaic project faced delays, and the project partner Quanjiao County issued a hearing notice, planning to terminate the investment agreement and recover 140 million yuan of investment. Similar cases of local governments pursuing debts from related enterprises include 4-5 cases (including the toy company Mubang and the clothing company Bangjie Shares). Under these circumstances, the Chinese revisionist government also canceled relevant subsidies.
The reformist media on one hand praised this, believing that canceling subsidies would not affect the development of the photovoltaic industry, but in fact, they believed it would not affect the export of goods and capital by the bourgeoisie, and they showed no concern for the exploitation of workers in related industries. For example, the upcoming subsidy cessation for the battery industry monopoly Ningde Times is using the brutal 896 work system to oppress workers. On the other hand, they also recognize that the Chinese revisionist regime’s debt-financed subsidies have caused many urban investment companies to default, provoking public dissatisfaction. Therefore, they criticize lightly but support broadly, acknowledging that such problems are not accidental. Local governments of the Chinese revisionist regime, in order to borrow and establish industrial investment companies, are linked to the reckless construction of water bureau buildings and cultural tourism projects, but they attribute these issues to individual policies, as if as long as bureaucrats are responsible for investment projects for life and patch up the state monopoly capitalism, the problems of anarchy in production can be solved—ultimately excusing the capitalist system. No matter how the Chinese revisionist regime conducts Keynesian-style subsidies, they will only intensify the exploitation of the people, exacerbating the contradiction between the infinite expansion of production and the shrinking relative capacity of workers to pay.
https://www.toutiao.com/article/7602604163834462766/
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http://www.trust-one.com/news/330041
Note: The “buy rather than produce, rent rather than buy” approach of the Chinese revisionist regime is to involve workers in management, prevent the easy dismissal of state-owned enterprises, or directly introduce foreign capital to develop capitalist production relations.