The Chinese government has issued an unofficial “window guidance” policy effectively freezing the approval of new energy-storage battery factories, according to inside sources cited by the South China Morning Post. The move—which has been in place since May—comes in response to concerns over vicious price competition and overcapacity, the industry insiders are reported as saying.
This comes in stark contrast to public statements China’s Ministry of Commerce rebutting a recent G20 communique addressing global concerns surrounding “economic imbalances” and excess capacity. The spokesperson, Huang Ling, said that China’s growth in exports reflects global demand and that periodical fluctuations in demand are normal. In July of this year, China’s Vice Commerce Minister, Yan Dong, went further and presented a paper titled “China’s position on the so-called overcapacity issue”, firmly denying the viewpoint that insufficient domestic demand was causing China to dump products overseas.
Despite the strong rebuttals, it is well known that China’s domestic economy is not in good shape, and the trade surplus has been consistently increasing over the past few years. This “window guidance”—a term used to describe guidance or policies delivered from the government to industry without any official announcement or publication—strongly suggests that there is a concern from policymakers regarding overcapacity, and that they are seeking to put a cap on it, at least in terms of energy-storage batteries.