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China, the world’s largest manufacturer of energy storage batteries, has temporarily suspended approvals for new production facilities, according to a report by Chinese financial news service Cailianshe.

The halt on approvals coincides with an official review launched by authorities to assess existing and planned energy storage manufacturing capacities, with a particular focus on battery cell production, the report cited industry sources as saying.

The intervention comes amid escalating concerns over industrial overcapacity across the energy storage segment, despite robust structural growth in demand for batteries utilized in power grid stabilization and backup power reserves.

According to Cailianshe’s sources, projects that have not yet broken ground will not proceed for the time being, while facilities currently under active construction will remain unaffected. Sources noted that the policy framework remains subject to potential revisions at a later stage.

Rapid Expansion of China's Energy Storage Sector

China’s energy storage footprint has expanded rapidly in tandem with the massive expansion of the country’s renewable energy infrastructure. However, mirroring trends observed in peer clean-tech industries—such as solar photovoltaic panels and electric vehicle manufacturing—producers have faced mounting margin pressure driven by aggressive market competition and sharp price declines.