In the past 20 years, with the world’s most complete industrial chain and hard-working factory model, “Made in China” has been deeply integrated into the daily lives of people around the world.
However, at present, the top management has suddenly stepped on the brakes, and a series of foreign trade reform actions are unfolding. This is not only an “anti-involution”, but also a major reshuffle of the entire system. A tough battle to “eliminate low-price” has begun.
The root cause of this change lies in “imbalance”.
China’s largest tax rebates are concentrated in industries with serious involution, such as photovoltaics and electronic products. Financial subsidies and corporate price-fixing are used, but profits are taken away by overseas customers. This is tantamount to using the country’s pocket to subsidize global consumption.
From April 1, 2026, export tax rebates for photovoltaic products will be canceled across the board, and the tax rebate rate for electronic products will be reduced from 9% to 6%, and the policy will focus more on intermediate products. The logic is clear: get rid of the lowest price system and let global customers pay for the true production costs.
This operation has three profound meanings.
First, the finance no longer pays for the excessive involution of enterprises. It supports the development of enterprises but cannot fall into the dilemma of being unable to increase prices even though the finance is free.
Second, it forces companies to increase prices and makes the global market realize that breaking away from China’s supply chain will lead to rising global costs.
Third, to seize back pricing power, in fields such as photovoltaics and batteries that already have global monopoly advantages, if we dare not raise prices at this time, we will waste our global monopoly position.
A price war is also taking place in the electric vehicle field.
In the past year, the export price of electric vehicles has been lower than the domestic price, triggering the EU’s suspicion of “subsidy dumping” and its preparations to impose high tariffs.
The extreme price reduction by Chinese companies made the EU finally accept the price limit agreement.
China has been exporting intermediate goods for a long time and its proportion has been increasing. The root cause is the “global supply chain trap”. Most companies are locked at the bottom of the supply chain, with low profits and high risks. However, Europe and the United States are worried about being “stuck”. This structural dilemma requires hard policy measures to break.
Canceling tax rebates essentially refuses to use state funds to subsidize the world. More importantly, it forces companies to transform through “price upgrades.”
Enterprises can choose to break through with strength and master core components and technologies; take root with brand downwards and build terminal brands; transfer overseas and move assembly lines abroad to avoid taxes and avoidance.
From a macro perspective, the RMB faces three path choices.
The first is continued moderate appreciation, which is stable but not friendly to enterprises; the second is loosening the water when the pressure is too high, which is refreshing in the short term but painful in the long term; the third is structural reform that is painful, which is costly in the early stage but may be the best in the long term.
At present, the government seems to be mainly focusing on the first path, supplemented by a limited second path.
Behind this systematic policy combination is thinking about the “weaning moment” of China’s economic transformation.
The end of tax rebates, price limits and initiative in political negotiations resulted in the reconstruction of the foreign trade pricing system.
China can no longer rely on the old routine of import surplus, but must bravely raise its export threshold and regain its right to speak.
The game of chess has begun. Whoever can wake up first in the track of “getting rid of the addiction to low prices” will have an advantage in the future foreign trade competition.
