China's Lithium Battery Industry Enters an Era of "Precision Governance"
On August 21, the State Administration for Market Regulation (SAMR) published six typical cases of business concentration review, with lithium battery and energy storage projects prominently featured. This is not an isolated move but part of a coordinated special campaign: since 2026, SAMR has been advancing a special action to improve the efficiency of anti-monopoly review on business concentration, explicitly designating lithium batteries, photovoltaics and the platform economy as priority sectors, and pledging to "lawfully support enterprises in exiting 'involution-style' competition through mergers and acquisitions."
From Warnings to Red Lines: Policy Tightens Step by Step
In March this year, SAMR issued an implementation notice (Guoshijian Jingzheng Fa [2026] No. 40), requiring the comprehensive application of anti-unfair competition measures to prevent and control "involution-style" competition in key industries. The newly revised Anti-Unfair Competition Law of the People's Republic of China, which took effect on October 15, 2025, provides a direct legal instrument against below-cost dumping. In April last year, four ministries including MIIT and the NDRC jointly convened a battery industry symposium, discussing a negative behavior list covering capacity warnings, price norms, account period compression and intellectual property protection.
These escalating policy measures send a clear signal: the era of "wild growth" in the lithium battery industry is accelerating toward its end.
Not a One-Size-Fits-All Crackdown, But Clear Red Lines
The core logic of this regulatory round is to precisely distinguish "disorderly expansion" from "market-based consolidation." The measures can be summarized in two words: simplify and strict.
- Simplify: Quality M&A projects that revitalize idle assets and strengthen supply chains will enjoy green-channel, streamlined procedures. In a typical case, Cangzhou Mingzhu's joint venture with Guangzhou Zengcheng Eastern Development Zone Investment Co. for a wet-process lithium battery separator project received unconditional approval in May, with officials stating that it is "conducive to optimizing the industry's competitive structure."
- Strict: Blind concentration that intensifies low-price infighting and redundant construction will be subject to rigorous review without leniency.
Approval Efficiency Is Also Improving
Since August 1, review authority has been further delegated to provincial regulators in Liaoning, Zhejiang, Sichuan and other regions. In pilot areas, entrusted review cases have averaged approximately 17.5 days from acceptance to conclusion, with all cases completed within 20 days. The substance of "simplification" is now being delivered at the operational level.
Market Logic Over Involution
It must be emphasized that this campaign is not administrative price intervention. It uses anti-monopoly review as a tool to define the boundaries of competitive conduct: benign technological competition is not interfered with, while only vicious price-driven attrition is being curbed.
In other words, the old playbook of "burning cash for market share and keeping lines running at a loss" is being institutionally blocked. Enterprises with genuine technology moats, full-chain integration capabilities and supporting competencies will emerge stronger in this round of survival of the fittest.
A Belated Correction for the Industry
Over the past few years, the lithium battery industry has suffered from overcapacity, lengthening account periods and frequent patent disputes, rooted in the mutually reinforcing cycle of low-level duplication and price wars. This regulatory intervention is precisely about correcting that distorted competitive ecosystem.
Key Policy Timeline
| Date | Authority | Measure |
|---|---|---|
| April 2025 | MIIT, NDRC and other departments | Battery industry symposium; negative behavior list discussed |
| Oct 15, 2025 | NPC Standing Committee | Revised Anti-Unfair Competition Law takes effect |
| 2026 | SAMR | Special action on anti-monopoly review; lithium batteries as priority sector |
| March 2026 | SAMR | Implementation notice (No. 40) on curbing involution competition |
| May 2026 | SAMR | Cangzhou Mingzhu wet-process separator JV approved unconditionally |
| Aug 1, 2026 | SAMR / Provincial regulators | Review authority delegated to Liaoning, Zhejiang, Sichuan; about 17.5 days average processing |
| Aug 21, 2026 | SAMR | Six typical business concentration review cases published |
What This Means for Global Buyers
For international buyers and partners, this regulatory shift is positive news for supply chain stability. As disordered capacity expansion is phased out, procurement from certified, compliant and technology-driven manufacturers becomes more reliable in terms of quality consistency, delivery schedules and long-term supply security.
Conclusion
The end of involution is never victory, but exhaustion. This time, policy is drawing an "escape route" toward healthy competition. Companies that transform first will seize the initiative in the coming industry reshuffle. For the lithium battery supply chain, the future belongs to those who do things better, more precisely and more irreplaceably.
