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China battery, solar chiefs urge curbs on new projects
Chairmen of China’s battery and solar giants are urging authorities to tighten approvals for new projects as excess capacity and cutthroat competition squeeze profits, even as global tailwinds could increase demand for renewable products.
Zhang Tianren, chairman of Tianneng Holding Group, a Chinese maker of lead-acid and lithium batteries, said top-down planning is needed to prevent overlapping projects by local governments and curb overcapacity across cities in mainland China.
Zhang said the imbalance is the result of decades of regional competition and warned that, in some cases, capacity has exceeded market demand by multiples, adding that China’s 2024 campaign against “involution” is taking effect, but there is still a long way to go to end domestic competition.
🔗 Source: South China Morning Post
🧠 Food for thought
Implications, context, and why it matters.
### China’s overcapacity is linked to local-government competition and state support
- Calls for action come as China’s clean energy manufacturing capacity exceeds demand. Rivalry among local governments to pull in projects and investment has added to the glut.
- China’s central government has also told leading battery makers to slow capacity growth and steer clear of price wars. It also urged them to raise product quality and protect intellectual property 1.
### Domestic oversupply can shape global markets and trade frictions
- Extra supply at home can send more low-priced green-technology exports into global markets. That flow has fueled trade disputes and claims of unfair competition in some overseas markets.
- China’s market regulator has told companies including BYD, an electric-vehicle maker, and battery giant CATL, one of the world’s largest electric-vehicle battery producers, to follow consistent competition rules as they expand overseas. The regulator also asked them to foster a “healthy competition ecosystem” and said authorities would rein in “involution-style” competition 2.
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