The chairmen of China’s battery and solar giants have called for more top-down regulations to rein in cutthroat competition, warning that unchecked overcapacity is squeezing profits and threatening the industry’s stability.

Despite tailwinds including the Middle East conflict that could increase demand for renewable products, overcapacity remains a major challenge for industry players.

Zhang Tianren, chairman of Tianneng Holding Group – ranked second behind Contemporary Amperex Technology Ltd (CATL) in a 2025 list of global top 500 new energy firms compiled by the state-backed China Institute of Energy Economics – urged authorities to tighten approvals for new projects.

“Policies should not only guide the industry but also provide a plan for it,” Zhang told the South China Morning Post. He said top-down planning was needed to avoid overlap and overcapacity in projects across mainland cities.

Zhang, whose company produces lead-acid and lithium batteries as well as industrial energy storage systems (ESS), said overcapacity in batteries was the legacy of decades of economic competition among local governments, which he described as the biggest issue. He warned that excess capacity now exceeded market demand by multiples, in some cases running into triple-digit percentages.

Although top policymakers mentioned “involution” for the first time in July 2024, addressing the need to tackle cutthroat competition, Zhang said there was still a long way to go to end domestic competition, even though the anti-involution campaign was taking effect.