Export Tax Rebate Cancellation for Primary Polysiloxane Starts April 1, Reshaping Trade Flows
China will officially abolish the 13% value-added tax export rebate for primary polysiloxane and related primary silicone products starting April 1, 2026, a landmark policy shift that is reshaping the country’s silicone export landscape and squeezing profit margins for export-oriented manufacturers. The rebate, which has been in place for over a decade, provided a critical cost advantage for Chinese silicone exporters, allowing them to compete aggressively on price in global markets. Its elimination will directly increase the cost of exported primary silicone products by an estimated 13%, squeezing exporters’ net profit margins by 3 to 5 percentage points and eroding the price competitiveness of low-value, commodity-grade silicone products.
The policy change is already triggering a strategic pivot among domestic silicone exporters, particularly small and medium-sized enterprises in Jiangsu and Zhejiang provinces that rely heavily on low-margin primary silicone exports. Many such firms have suspended acceptance of new low-profit overseas orders, paused existing order fulfillment, and shifted their focus to the domestic high-value market, where profit margins are more resilient. Large leading enterprises with diversified product portfolios and high-end specialty silicone offerings are better positioned to absorb the impact, as their export mix includes fewer primary products and more high-margin specialty items not affected by the rebate cancellation. Long-term, the policy is intended to drive industrial upgrading, discouraging low-value, high-volume commodity exports and incentivizing manufacturers to invest in high-performance, high-value-added silicone products. Industry experts predict that China’s silicone export volume will moderate slightly in 2026, but export value will remain stable or rise as the product mix shifts toward higher-end formulations, improving overall industry profitability and global positioning.
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