Citigroup expects that the reduction of export tax rebates for solar energy and other products in mainland China will have a limited impact on the macro economy

Citigroup's research report indicates that China's announcement last week to cancel or reduce export tax rebates on solar and battery-related products may have little impact on the macroeconomic level. The export value of the targeted products in the first eleven months of last year was approximately USD 175 billion, accounting for about 5.1% of China's total exports.

Citigroup believes that this move is an external rebalancing measure aimed at easing trade tensions. More voluntary export restriction measures are expected this year. The resulting industry consolidation is also beneficial in curbing "involution"; and it is anticipated that the renminbi will appreciate in a "controllable" manner