China will reduce tax cuts for exports of solar products and lithium batteries, seeking to ease international concerns about overcapacity in its new energy sector, which has led to growing trade tensions.

The move will increase costs for manufacturers and export prices, discouraging brutal low-cost competition and excessive expansion of the industry, according to insiders.

This could help manage losses amid a sudden collapse in external demand, such as in the case of a second trade war launched by the United States, they added.

Starting December 1, the export tax rebate rate for 209 products, including certain refined petroleum products, photovoltaic products, batteries and certain non-metallic mineral products, will be reduced from 13 percent to 9 percent, according to a joint statement Friday from the Department of Finance and State Tax Administration.

The country will also cancel the tax reduction on 59 other products, including aluminum and copper products, the statement said.