This article explains how China’s electricity market reforms and strong demand have triggered a battery boom.
Energy storage is now more profitable than before, and the country’s battery companies are running at full throttle. Battery cell exports are also at record levels, and demand is fueled by renewable energy, data centers, and AI, among others—both in China and worldwide.
The Chinese clearly dominate the market at present, although potential restrictions from the United States bring some uncertainty for the future.
China’s exports of energy storage and other non-automotive batteries rose 51.4% in the first 11 months from the same period last year, faster than the 40.6% growth in EV battery exports, according to the China Electric Vehicle Industry Technology Innovation Strategic Alliance.
China already has the world’s largest battery energy storage fleet - some 40% of the global total - driven in part by local government mandates for developers to add storage to wind and solar projects. China’s battery storage this year overtook its capacity of conventional pumped hydro, a geographically more limited technology that uses water stored behind dams to generate electricity when needed.
I’ve been thinking about the same thing, and half-seriously, the only way I’ve come up with is shorting Western companies struggling in the face of Chinese competition.
In addition to the lack of transparency weighing down the Chinese stock market and companies, the competition between Chinese companies is so cutthroat that there isn’t much left for shareholders. Apparently, the pseudo-communists understand the market economy better than Westerners do.
Many are trying to profit from China’s rise through the raw materials it consumes. If China’s domestic demand finally starts to pick up, then raw materials will be in demand. Another option is to bet on the currency strengthening: investing in something safe operating in the local markets and hoping for profits to scale through the exchange rate. It will be interesting to see how the new five-year plan begins to reshape the Chinese economy; a focus on consumer purchasing power has been predicted for so long that one shouldn’t be disappointed.
China’s pace in the auto industry (as well) is undeniably quite wild
But I understood that these figures do not include all produced vehicles, e.g., pickups and similar larger vehicles, which are produced in large numbers in the United States.
Vanke’s bankruptcy and the next phase of China’s massive real estate crisis have been pushed forward to January:
Dec 22 (Reuters) - Embattled property developer China Vanke (000002.SZ)narrowly dodged a default on Monday after onshore bondholders approved a plan to extend the grace period of a 2 billion yuan ($284 million) bond repayment, a company filing showed, temporarily relieving investor worries of a worsening debt crisis in the sector.
But bondholders again rejected the state-backed developer’s proposal to delay repayment of the bond by one year, according to a filing with the National Association of Financial Market Institutional Investors on Monday, despite it being sweetened with an offer to pay overdue interest by the end of the current five-day grace period on Dec 22.
The bond in question matured on December 15, and bondholders rejected an earlier proposal by Vanke to delay repayments.
The extended grace period to 30 trading days would mean Vanke now has until the end of January 27 to renegotiate and reach an agreement with bondholders on terms to delay the repayment. Otherwise, it would face a default and would likely need to all of its debt.
China promises (one can always promise) to invest even more heavily in the modernization of its industry and technological breakthroughs after an exceptionally sluggish industrial year.
The production of major companies grew by an estimated only about six percent, and furthermore, the pace slowed down significantly in November. The government is now seeking growth from more advanced manufacturing (AI, semiconductors, etc.) and technological self-sufficiency.
On artificial intelligence, the industry ministry said it will expand efforts to help small and medium-sized enterprises adopt the technology, while fostering new intelligent agents and AI-native companies in key industries.
Officials also vowed to “firmly curb” deflationary price wars, dubbed “involution”, referring to excessive and low-return competition among firms that erodes profits.
China requires semiconductor manufacturers to ensure that at least 50 percent of the equipment used in building new capacity is domestically produced.
The requirement is not official in a formal sense, but those applying for permits must nonetheless demonstrate compliance through bidding processes. The policy supports self-sufficiency and gained momentum following U.S. export restrictions. Applications falling below the threshold are often rejected.
China’s progress is being viewed with concern by global competitors, as foreign suppliers are squeezed out of the China market.
Naura filed a record 779 patents in 2025, more than double what it filed in 2020 and 2021, while AMEC filed 259, according to Anaqua’s AcclaimIP database, and verified by Reuters.
That’s also translating into strong financial results. Naura’s revenue for the first half of 2025 jumped 30% to 16 billion yuan. AMEC reported a 44% jump in first-half revenue to 5 billion yuan.
Analysts estimate that China has now reached roughly 50% self-sufficiency in photoresist-removal and cleaning equipment, a market previously dominated by Japanese firms, but now locally led by Naura.
“The domestic equipment market will be dominated by two to three major manufacturers, and Naura is definitely one of them,” said a separate source.
China ended this year on a slightly brighter note, as the December manufacturing PMI rose to 50.1 and exceeded market expectations, representing growth for the first time since March. In addition, the composite PMI as well as the service and construction indices improved. This momentum was supported by a recovery among large companies, while medium-sized and small businesses remained weak.
The article states that concerns regarding the housing sector and consumption continue, which likely doesn’t surprise anyone. The central bank kept key interest rates unchanged, although some expected they might be raised.
"Key Points
Factory activity returned to expansion after nine months of contraction.
The tweet highlights a familiar issue: how China dominates the production of many critical minerals (in some cases up to 99 percent), which increases the vulnerability of technology sector supply chains.
Prior to the coup targeting Maduro, Venezuela’s oil volumes to China were estimated to rise to about 600,000 barrels per day in March of this year, following the partial easing of sanctions.
Following the U.S. intervention, exports are likely to collapse to near zero, which will strain China’s alternative procurement channels.
According to a private Chinese survey, the services sector grew in December, but on the other hand, the pace slowed slightly. The PMI fell to 52.0, meaning growth continues, but at its weakest in six months. Domestic activity provided support, but exports and tourism faded; additionally, companies have continued to reduce their workforce.
While the services PMI suggests growth momentum remains tepid, policymakers’ focus on consumption-led stimulus and infrastructure spending aims to cushion the economy.
This was a good podcast; Nordea’s Chief Economist Tuuli Koivu was a guest on Sijoituskästi talking about China.
In this Friday’s episode, the guest is Tuuli Koivu – Nordea’s Chief Economist and one of Finland’s most experienced experts on the Chinese economy. This episode delves into how China’s economy actually works: overcapacity, the role of the state, export-driven growth, and weak domestic demand. The discussion also explores the significance of Temu and Shein, China’s relationship with Europe and the United States, and whether China is a threat or an opportunity for investors.
0:00 Intro 2:49 How does the structure of the Chinese economy differ from Western countries? 5:30 How is power reflected in the economy on a practical level? 7:23 What does overcapacity mean? 11:56 Empty airports, factories, and highways 12:40 Where does it lead when production exceeds demand? 15:08 Local government 17:21 Why does China allow the Tesla factory? 19:06 How have the problems been swept under the rug? 22:45 Can China’s economic growth be sustained? 28:25 How much of the world’s consumer goods does China produce? 32:05 China enters the competition in high-tech products 37:35 What should Europeans take as a model to get rid of China-dependency? 41:10 How could Europe bring production efficiency closer to China’s level? 44:06 The moral side of enhancing production efficiency 49:09 Chinese online stores 53:35 How important and profitable are Shein and Temu for the Chinese economy? 57:13 China has strong exports, weak domestic demand 58:50 Chinese standard of living and income inequality 1:09:09 What was the 2021 crisis about? 1:19:12 Who wins in the housing market — or does anyone? 1:21:56 Owning a home as security, pension, and a way of preparation in China 1:23:34 Can Chinese people invest in, for example, US indices? 1:25:39 Is China dependent on the US or vice versa? 1:28:12 Trade war and concrete moves 1:32:24 Is China a communist state or a functional market economy? 1:36:30 What if you oppose Beijing? 1:42:18 Do you dare to criticize the Beijing government? 1:50:41 How do the Chinese perceive the country’s leadership? 1:56:31 Democracy and freedom of speech 1:59:11 Is China more of a threat or an opportunity for the investor? 2:04:29 China–Taiwan situation 2:09:32 Opinion on cryptos?
Embattled property developer China Vanke is seeking to further extend the grace period for a 2 billion yuan ($290 million) bond repayment by 90 trading days as it works to renegotiate a debt rollover plan with holders, sources with knowledge of the matter said on Tuesday.
Vanke narrowly dodged a default last month as bondholders approved a plan to extend the grace period of the bond repayment to 30 trading days from five, though they twice resoundingly rejected proposals to defer the repayments by one year.
A good paper on Chinese solar cell subsidies, which have completely distorted competition in the industry both in China and globally. In practice, China has destroyed production in the rest of the world and at the same time driven its own solar cell production into massive overcapacity.
Excessive investment in solar manufacturing capacity exacerbated by large amounts of subsidies has increased concentration and undermined diversification of supply in the solar value chain. In 2023, Chinese module producers accounted for more than 90% of global shipments by volume, while OECD-based producers (e.g. based in Germany, Japan, and the United States) saw their combined share fall below 10%, down from 80% back in 2005.
The profitability of Chinese producers themselves has also collapsed.
Solar cells are, of course, not the only sector, but a prime example of the characteristics of China’s subsidy-driven competitive economy. In practice, this party is also funded through income transfers. How long can China afford to support several different production sectors at the expense of capital and households?
