In 2025, China will export approximately 8.32 million vehicles and be sold to more than 200 countries and regions.

Exports are still rushing, but a braking suggestion from the industry has begun to brush the screen-it is recommended to reduce and gradually cancel the export tax refund for passenger cars in a timely manner.

Let me be clear: this is a recommendation, not a policy. The Ministry of Commerce and the State Administration of Taxation currently do not have any documents to cancel the export tax refund for passenger cars.

But its weight lies precisely in the time when it appeared: on September 1, the Ministry of Commerce, the Ministry of Industry and Information Technology, and the State Administration for Market Regulation just jointly released the "Guidelines for Overseas Competition Behavior and Compliance Construction in the Automobile Industry"-a soft document for enterprises to refer to. document. Within a week, calls for hard restraint came.

Soft guidelines cannot control things, and some people propose to use tax rebates to close things. This signal must be understood by those making exports.

1. What does the suggestion say: Four moves

The core of the proposal is not to cancel it across the board, but tostep down the slope step by step, reduce it first and then cancel it, and copy the path of photovoltaics and batteries:

The frame of reference is already there: the photovoltaic tax refund rate will be reduced from 13% to 9%, which will be directly zero from April 2026; the battery tax refund will be reduced from 13% to 9%, and then to 6%, which will be cancelled in 2027.

Photovoltaics are retired, steel is retired, and lithium batteries are retired. Cars should be no exception.

There are also three measures to support the package:

differentiated rhythm

: New energy vehicles are highly competitive, and tax rebates can be cancelled first; traditional fuel vehicles will retain a longer transition period;

Fiscal reinstatement

: The saved tax refund funds will be directed to the research and development of core technologies such as low-interest loans and policy insurance for overseas localized factories, solid-state batteries and high-end smart driving, and subsidizing the domestic consumer market;

Supporting facilitation

: Simultaneously simplify foreign investment approvals, relax foreign exchange controls, facilitate visas for overseas employees, and reduce institutional friction for companies entering.

Summary in one sentence: Use the subtraction of tax rebates to replace the addition of industrial upgrading.

2. Why now: Soft guidance cannot control the accounts

On August 24, the three ministries and commissions issued the "Guidelines for Overseas Competition Behavior and Compliance Construction in the Automobile Industry", requiring companies to establish cost-based and international market supply and demand-oriented pricing strategies to avoid multiple frequent and large price fluctuations.

There is no problem with the direction, but this document has no supporting penalty clauses, and it is not linked to export qualifications, nor is it linked to tax refund qualifications. What it changes is the expectations of the company, but cannot change the company's books.

The Guidelines solve behavioral advocacy issues, and tax refund adjustments solve incentive mechanisms. The former relies on consciousness, while the latter directly changes the cost structure-once the tax refund rate changes, the company must re-calculate the quotation and re-evaluate the benefits of exchanging price for volume.

This is also the reason why it is recommended to throw it at this moment: soft constraints have been tried, and the next step is to talk about hard constraints.

3. The most heart-warming point: Who took away the benefits of tax rebates?

This is the paragraph in the full text that is most worth reading repeatedly.

The original intention of export tax rebates is to make export goods free of domestic value-added tax and enhance price competitiveness. However, who ultimately belongs to the policy benefits depends on the bargaining power of each link in the industrial chain.

When the supply exceeds demand, tax refund space may be transformed into corporate profits and channel investment. However, when multiple China brands fight hand-to-hand in hand in the same overseas market, this part of the space is transferred layer by layer in price negotiations.

The survey found a red flag: some overseas dealers haveincluded export tax rebates of China companies into the purchase quotation model, and directly require exporters to make concessions during negotiations.

In name, the tax refund was refunded to China companies;

In fact, before the goods have been exported, the price benefits have been advanced by overseas channels.

What is even more uncomfortable is the capital chain: the exporter must pay for vehicle procurement, warehousing, logistics, and insurance first, and tax refunds must wait until the customs declaration, document review, and tax declaration processes have been completed before the accounts are accounted for. Advance pressure + tax refund cycle, squeezed at both ends.

The original words of the front-line exporter were very direct: tax refunds are better than no refund.

I don't want to pay more taxes, but I want to return to a clear after-tax quotation basis so that overseas buyers do not have the bargaining knife of tax refund discounts.

Note that this is not true for all markets and all businesses. However, in a market where competition is fierce and exporters have weak bargaining power, tax rebates are indeed becoming a basis for overseas buyers to lower prices.

4. International game: Tax rebates are becoming a label for attacking China

Looking at overseas, this account cannot be counted only domestically.

In October 2024, the EU will impose an additional countervailing duty of up to 35.3% on pure electric vehicles made in China, plus a basic tariff of 10%, and a comprehensive tax rate of up to 45.3%. In 2026, the EU will further establish a price commitment declaration mechanism-in addition to tariffs, minimum import prices, import quantities, and local investment requirements may all be put on the negotiating table.

Trade constraint tools are being integrated.

According to WTO rules, export goods are subject to zero indirect tax rates, which is an internationally accepted arrangement and does not naturally constitute export subsidies. Butlegal attributes and international political narratives are two different things:

The word export tax rebate is too easily packaged by foreign political forces as evidence of low-cost exports by China government-funded enterprises, and has become a ready-made label for protectionist mobilization.

Adjusting tax rebates cannot be exchanged for the automatic removal of barriers in Europe and the United States. However, taking the initiative to remove this label can reduce a pretext for attack and leave more room for maneuver on price commitments, tariff negotiations, and local investment negotiations.

Instead of waiting for trade barriers to be forced to change after they are increased, it is better to complete the policy shift ahead of schedule and take the initiative in your own hands.

5. Whoever is most injured will benefit

If the recommendations are implemented, the industry will be severely divided:

Most injured: pure trade and stitched exporters.

For businesses that rely on low-price resales, tax refund funds and short-term price differences, the profit margins will be significantly narrowed. Tax refund reduction = book rewriting, and the survival foundation of this type of model has been shaken.

Relative benefits: Companies with brands, channels, and after-sales services.

They rely on overseas profits and long-term operating capabilities to survive. The industry washes away low-price disruptors, leaving behind a cleaner competitive environment.

But note-it is recommended to oppose drawing lines based on enterprise size:

Some small and medium-sized enterprises undertake the functions of market development, channel innovation and market segmentation services. What needs to be changed is the business model that relies heavily on low prices, lack of after-sales services, and disrupts channel order, rather than simply dividing support and restrictions according to the size of the enterprise.

There is also a rhythm dividend: priority will be given to new energy vehicles and a longer transition period for fuel vehicles. The export of used fuel-fueled cars may actually get a valuable buffer period.

end

The export tax rebate system has played an important role in the 40 years of the rise of China's manufacturing industry. But the value of policy tools lies precisely in their ability to withdraw as the industry matures.

The 13% tax refund was an engine driving exports in the past;

Today, it may be becoming a hotbed for curing low-cost inflations.

Eliminating it is not to weaken the competitiveness of China's cars in sailing, but to force a higher dimension of competitiveness-from price war to value war, from trade exports to global operations.

This is a turning point that China cars must complete when going to sea.

Active turning is better than passive turning.

Source: Xiong Yu, digital automobile export

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