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Home » China also seems to think it’s producing too much.
China

China also seems to think it’s producing too much.

i2wtcBy i2wtcMay 9, 2024No Comments4 Mins Read
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A lithium battery product factory located in Yichang City, Hubei Province, China.
Reuter/Stringer

  • China has released draft regulations for the battery industry, hoping to curb overproduction.
  • This contradicts China’s official position. industrial Domestic overproduction.
  • Western countries have complained about China’s overcapacity, but analysts say that doesn’t apply to all sectors.

Western countries have complained that China is overproducing goods and dumping them onto global markets. The comments infuriated the Chinese government, which denied the claims by Monday.

But on Wednesday, China’s Ministry of Industry and Information Technology released a proposal suggesting Beijing may agree with some of the Western accusations.

In its proposal, 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 includes a range of issues, including minimum technical standards and environmentally friendly guidelines for battery production. But it’s also worth noting that lithium-ion manufacturers should avoid building factories that “simply expand production capacity.”

According to a BloombergNEF analysis, China’s battery production was already large enough to meet global demand in 2023 alone.

The proposal points to another of China’s own concerns about overcapacity, even as Chinese leader Xi Jinping’s government pushes back on the claims. It came just as Mr. Xi was completing his first visit to the European Union in five years.

China’s overcapacity problem does not extend to all sectors

To be sure, China’s overcapacity problem does not extend to all sectors.

A separate Bloomberg analysis found that the problem was mainly in areas where China already had an advantage over Western countries, such as low-tech products and building materials after the real estate bust.

The country also has a large overproduction of solar panels and batteries.

Other analysis supports Bloomberg’s findings that Chinese factory production is not flooding global markets in all areas.

Louise Lu, chief economist at Oxford Economics, said: “New, but not overwhelming, evidence supports the recent geopolitical narrative of overproduction of Chinese goods that unfairly undermines global manufacturing competitors on price. “We found macro evidence that there is no such thing,” Louise Lu, chief economist at Oxford Economics, said in an endnote. April.

Lu said a cyclical oversupply will likely occur in the short term because of China’s economic woes, which has hit domestic demand, but it is not a persistent problem over time.

Still, this is bad news for Western countries, which are seeking government incentives to increase their land-based battery storage capacity in markets such as the United States, Canada, Europe, and India.

Chim Li, a China analyst at the Economist Intelligence Unit, said in a note in mid-April that a “supercycle” in the strategic field: EVs and renewable devices were politically criticized.

“These sectors are highly politicized globally. Lower prices can be seen as a result of government support, but they are also key to accelerating the green transition,” Lee wrote.

China’s global share of battery manufacturing capacity is expected to decline

Despite the West’s consternation, there is a bright side for the West. China’s global share in battery manufacturing is expected to decline in the coming years, according to a report released Monday by the International Energy Agency.

According to the IEA, China currently accounts for more than 80% of battery production capacity, followed by the United States and the EU with about 5% each.

However, the paper said China’s share of battery manufacturing could fall to around 60% by the end of 2010, while the US and EU each have a The company says it has the potential to triple its market share to around 15%. I.E.A.



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