- China has released draft regulations for the battery industry, and it wants to curb overproduction.
- Contrary to China’s official position that no Industry High production in the country.
- The West complains about China’s overcapacity, but analysts say this does not apply to all sectors.
The West complains that China is over-producing and dumping on the world market. The comments drew the ire of Beijing, which, as of Monday, He denied the demands.
But on Wednesday, Ministry of Industry and Information Technology of China Beijing released a plan that indicated it might agree with some of the West’s accusations.
In its plan, the ministry lays out plans to regulate the battery industry — which, along with electric vehicles and solar cells, is a key pillar of growth in China’s economic transformation.
The proposal covers several issues, including minimum technical standards and environmental guidelines for battery production. However, it also notes that lithium-ion producers should avoid building factories that “simply expand production capacity.”
By 2023 alone, China’s battery production was already large enough to meet global demand, a BloombergNEF The analysis found
The proposal illustrates China’s own concerns about overcapacity, although the administration of Chinese President Xi Jinping has pushed back on the claims. It comes as Xi wraps up his first visit to the European Union in five years.
China’s overcapacity problem does not extend to all sectors
Of course, the problem of overcapacity in China does not extend to all sectors.
Another one Bloomberg analysis The problem was mainly in areas where China already dominated the West, such as low-tech goods and construction materials, after the country’s real estate bust.
The country also produces an oversupply of solar panels and batteries.
Other analyzes support Bloomberg’s findings that China’s factory output is not flooding global markets in every sector.
“We see macro evidence to support the recent geopolitical narrative of excessive Chinese goods production unfairly undercutting the prices of global manufacturing competitors, but not overwhelmingly so,” Louis Lu, a leading economist at Oxford Economics, wrote in his note. April.
Lu said cyclical oversupply may be present in the near term as China’s economic woes hit domestic demand, but it has not been a sustainable problem over time.
However, this is not ideal for the West, which is trying to increase its own onshore battery capacity with government incentives in markets including this one. United States of America, Canada, EuropeAnd India.
Sim Lee, a China analyst at the Economist Intelligence Unit, wrote in a note in mid-April that a “super-cycle” in strategic sectors — Like EVs and renewables – politically charged.
“These sectors are highly politicized globally: low prices may be perceived as a result of government support, but they are critical to accelerating the green transition,” Lee wrote.
China’s global share of battery production capacity is expected to decline
Despite the consternation of the West, the bloc has an upside. China’s global share of battery production is expected to decline in the coming years. International Energy Agency Published on Monday.
According to the IEA, China now accounts for more than 80% of battery production capacity, followed by the US and EU with 5% each.
But China’s share of battery production could drop to around 60% by the end of the decade, while the US and EU could triple their share to 15% thanks to anti-inflation legislation and policies that support energy transition commitments. IEA.
