China issues draft guidelines to rein in lithium battery industry
China has released draft guidelines aimed at reining in the country’s lithium battery industry, which has been in the Western crosshairs over fears that subsidized overproduction could flood global markets with reduced exports.
Lithium-ion batteries are a form of rechargeable energy storage used in everything from electric cars to scooters, laptops and motorized wheelchairs.
According to the Economist Intelligence Unit, China is the world’s largest market for lithium batteries, accounting for about 57 percent of global demand in 2022.
The country’s exports have also risen sharply in recent years, including a 33 percent year-on-year increase in 2023, according to state media reports.
Guidelines issued on Wednesday by the Ministry of Industry and Information Technology – which are not legally binding and instead aim to “encourage and guide” the sector – emphasize that lithium battery companies should “avoid projects that purely increase capacity”.
Instead, they should “strengthen technical innovation, increase product quality and reduce production costs,” the document said.
The guidelines also urge companies not to build production facilities on protected agricultural land or environmentally important areas.
Existing factories in protected areas should be closed or “strictly control their size and phase out,” the document said.
The ministry also called on companies to obey national workplace safety laws and comply with existing product standards.
Foreign officials have warned that as Chinese government support creates more manufacturing capacity than global markets can absorb, a flood of cheap exports in key sectors including renewable energy and lithium batteries could hurt industries elsewhere.
Beijing has hit back at Western fears, with Chinese President Xi Jinping telling European leaders this week that the “so-called ‘Chinese overcapacity problem’ does not exist, either from the perspective of comparative advantage or in light of global ask.”
