China's MIIT Pledges Action to Curb 'Irrational Competition' in Battery Energy Storage Sector

MIIT Addresses Market Instability

On November 28, 2025, China's Ministry of Industry and Information Technology (MIIT) announced its commitment to implementing targeted policies aimed at curbing 'irrational competition' and oversupply within the nation's power and battery energy storage industry. The pledge was made during a meeting with executives from various battery firms, signaling a concerted effort to stabilize a rapidly expanding but increasingly volatile market.

Minister Li Lecheng emphasized the Party Central Committee's significant attention to the development of this crucial industry. He stressed the necessity of comprehensively assessing the current situation and executing directives to address 'involutionary' competition, a term used to describe price wars stemming from excessive competition that hinder revenue.

Causes of 'Irrational Competition'

The MIIT's intervention comes as oversupply and aggressive bidding practices have severely eroded profit margins for numerous players in China's energy storage market. The country, recognized as the world's largest energy storage manufacturing hub, has witnessed a surge in battery production capacity, partly driven by the electric vehicle (EV) industry's rapid growth.

Recent tenders in China have seen average lithium-ion battery energy storage system-level bids plummet to around $65/kWh, a figure that has reportedly startled Western markets. This aggressive low-price competition threatens to destabilize businesses and impede sustainable industry growth, prompting calls from industry voices for price control and higher standards.

• Oversupply: Production capacity in China's lithium-ion battery industry surpassed 2 TWh in 2024, exceeding total demand by 60%.
• Aggressive Bidding: Low-price competition has led to significantly reduced profit margins.
• 'Involutionary' Competition: Destructive price wars are holding back revenues and long-term opportunities.

Policy Measures and Future Directives

To address these challenges, the MIIT outlined several key measures and directives. The ministry aims to take swift action to rein in aggressive low-price competition and foster a healthier market environment.

Key policy directions include:

• Strengthening capacity monitoring, early warning systems, and regulatory oversight.
• Intensifying supervision of production consistency and product quality.
• Cracking down on intellectual property violations.
• Guiding enterprises to scientifically plan production capacity and expand overseas in a rational and orderly manner.
• Encouraging companies to drive innovation, boost research and development (R&D), and enhance supply chain collaboration.

These efforts are intended to promote high-quality, sustainable development within the industry.

Broader Industry Context

This latest move follows previous discussions and policy shifts within China's energy sector. In December 2024, the China Energy Storage Alliance (CNESA) held a closed-door seminar to address destructive competition. Additionally, a July 2024 Political Bureau meeting of the Communist Party of China Central Committee emphasized industry self-discipline and orderly exit paths for outdated capacity.

Earlier in March 2025, China also introduced a significant policy shift by removing the energy storage mandate for renewable energy plants, which had previously driven between 50% and 75% of domestic demand. This transition towards a market-based pricing mechanism for energy storage projects has further reshaped the industry landscape.

The MIIT's current initiative underscores a strategic pivot towards prioritizing quality and sustainable growth over unchecked expansion, aiming to safeguard the long-term viability of China's globally significant battery energy storage industry.