The chairmen of several of China’s largest battery and solar energy companies have taken the unusual step of publicly calling for top-down government intervention to address a deepening overcapacity crisis that threatens the sector’s financial viability. As reported by the South China Morning Post, Zhang Tianren, chairman of Tianneng Holding Group, has been among the most vocal, urging Beijing to tighten approvals for new manufacturing projects and to implement national-level production planning that goes beyond the current system of market-driven investment decisions.
The call for intervention is striking because it comes from the industry itself rather than from regulators or academics. Chinese business leaders typically avoid public criticism of market conditions that could be read as a critique of government policy. The willingness of major chairmen to speak openly about the severity of the overcapacity problem signals that the situation has deteriorated to a point where the normal reluctance to rock the boat has been overcome by the urgency of the financial crisis.
The Scale of the Problem: Triple-Digit Overcapacity in Some Segments
The numbers behind the overcapacity crisis are stark. Zhang Tianren cited figures suggesting that excess capacity in certain battery segments now exceeds market demand by triple-digit percentages — meaning that the industry has built more than twice the production capacity that the market can absorb, even accounting for strong projected growth in EV and energy storage demand. The solar panel sector faces a similar dynamic, with global installation rates unable to keep pace with the expansion of Chinese manufacturing capacity.
This overcapacity is the product of a decade of intense competition among local governments, each of which subsidized the construction of new factories to boost regional GDP and employment figures. The incentive structure rewarded capacity addition without regard for market balance, resulting in a sector that is structurally unprofitable at current prices. Solar panel prices have fallen by more than 50% over the past two years, and battery prices have followed a similar trajectory — outcomes that are good for consumers and for the energy transition globally, but catastrophic for the manufacturers who built their business plans on higher price assumptions.
The “Anti-Involution” Campaign Meets Its Hardest Test
Beijing has acknowledged the overcapacity problem through its “anti-involution” campaign, which aims to reduce the zero-sum domestic competition that drives capacity expansion without improving quality or innovation. The campaign has produced policy statements and some targeted interventions in specific sectors, but industry leaders argue that it has not yet translated into the kind of binding, enforceable production controls that would actually change investment behavior.
The battery and solar sectors represent the hardest test of the anti-involution campaign because they are simultaneously strategic priorities for Beijing — central to China’s clean energy transition and its global industrial competitiveness — and sources of severe market distortion. Imposing production controls on these sectors risks slowing the capacity expansion that China needs to meet its own climate targets and to maintain its dominance in global clean energy supply chains. The tension between these competing objectives has made decisive action difficult, and the public pressure from industry chairmen is an attempt to break that deadlock.
What Tighter Approvals Would Mean in Practice
The specific policy ask from industry leaders, tighter project approvals, would require the central government to take back authority over investment decisions that have largely been delegated to provincial and local governments. This is a significant political ask, because local officials have strong incentives to approve new projects regardless of national market conditions, and because the central government has historically been reluctant to override local economic decision-making in sectors that are not considered security-sensitive.
If Beijing moves to implement tighter approvals, the mechanism would likely involve national capacity planning targets, mandatory environmental and market-impact assessments for new projects above a certain scale, and potentially a permit system that limits total new capacity additions in a given year. The precedent exists in other sectors, steel and cement have both been subject to similar controls at various points, but implementing it in batteries and solar would require navigating the competing interests of dozens of provincial governments and hundreds of companies that have built their growth strategies around continued capacity expansion. The broader industrial policy challenge connects to questions about how Beijing coordinates across sectors, as seen in EastFrontier’s article on Beijing’s 32 measures to accelerate AI drug discovery.
The urgency of the situation is underscored by the fact that industry leaders are making their case publicly rather than through the usual channels of private lobbying and government consultation. When the chairmen of major listed companies begin speaking openly about an existential industry crisis, it is typically a sign that private channels have been exhausted and that the situation has deteriorated beyond the point where it can be managed quietly. Beijing will be watching the market closely over the coming months, and the response, or lack of one, will signal how seriously the central government takes the overcapacity problem relative to its other industrial policy priorities.