China Uses Parasitic Export Model to Dominate Global Battery Market: Experts
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For more than a decade, communist China has been working to corner the world’s battery industry, viewing the sector as a cornerstone for advancing its strategic aims at a time when demand for electricity generation and storage is on the rise globally.
Experts have criticized the Chinese regime’s aggressive non-market activities—including state subsidies, forced tech transfers from foreign companies operating in China, and predatory pricing—as a major concern for the rest of the world.
Batteries of greater efficiency and longevity are becoming increasingly essential in everyday consumer items and electric vehicles. They’re also playing a greater role in storing electricity produced by solar and wind power, as well as for industrial and military equipment, such as drones.
A Resource Rivaling Oil
Chinese Communist Party (CCP) authorities had identified battery development as a critical sector as early as the 2000s, hoping to catch up to Japan and other countries with advanced electronics. The CCP’s “Made in China 2025” plan, rolled out in 2015, featured the electric vehicle (EV) and battery industries as key areas for Beijing to invest heavily in.Taiwanese researchers who spoke with The Epoch Times said that the CCP’s approach to the industry was built on the anticipation that battery technology would come to rival oil as an important strategic resource.
While actively marketing its batteries for export, the CCP only gave subsidies to Chinese EV makers if the batteries they used were domestically produced, laying the groundwork for future dominance in the sector.
Tai Chih-yen, associate research fellow at Taiwan’s Chung-hua Institution for Economic Research (CIER), said that a major factor behind China’s rapid rise in the battery industry was how it flouted international norms governing trade and inspection, as well as intellectual property rights, to attract technology and customers from abroad.
The Chinese regime also got a head start in marketing batteries themselves, rather than as part of the products they are used in, Tai told The Epoch Times.
He gave the example of Japanese companies Panasonic and Sony, which were strong in battery tech but tended to use it in their own branded electronics, such as radios or computers.
Other companies accounted for 7 percent of the world’s EV battery production.
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‘Parasitizing’ the World’s Battery Supply Chain
The FDD noted in a July 25 report that batteries are becoming an essential part of modern warfare, as militaries rely increasingly on drones, handheld electronic equipment, unmanned vessels, and directed-energy weapons such as lasers.“Chinese market dominance results in large part from opaque or illicit dealings—bribery, debt traps, forced labor, lopsided contractual terms, intellectual property theft, and trade manipulation,” the FDD report reads, with its authors recommending more stringent laws on financial reporting and transparency to expose Beijing’s illicit dealings.
“Other countries maintain open markets, but once you go into China, you face not only tariffs but numerous non-tariff barriers,” Tai told The Epoch Times.
“They are not looking at this from a market-oriented perspective; rather, they’re parasitizing other countries.”
Su Tzu-yun, director of the Division of Defense Strategy and Resources at Taiwan’s state-run Institute for National Defense and Security Research (INDSR), told The Epoch Times that in addition to prioritizing EVs and advanced battery technology, the CCP also focused on wresting control over the the entire supply chain, focusing on the rare earth elements and other minerals needed for their manufacture.
China itself possesses large deposits of these resources. It controls 65 percent of the world’s lithium production, as well as 70 percent of the materials used in making cathodes and 85 percent of those for anodes, including lithium, nickel, cobalt, and graphite, according to FDD.
China also augmented its own advantage in natural resources by acquiring extensive access to raw minerals in South America and Africa, Su noted, describing the CCP’s overall strategy to capture all links of the battery supply chain as “raise, contain, and slaughter.”
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Massive Subsidies and Market Distortion
According to the Center for Strategic and International Studies (CSIS), between 2009 and 2023, China’s EV industry received about $230.9 billion in state subsidies.While government subsidies in and of themselves are not inherently damaging to market activity, the scale of the Chinese state’s investment in its EV development allows its companies to ignore concerns about profitability, reliability, or safety, and overwhelm foreign competitors.
Taiwanese economist and commentator Huang Shih-tsung told The Epoch Times that while Western companies are beholden to the logic of markets and capital, Chinese companies propped up by the CCP can “expand continuously, even if they’re losing money.”
“The goal is to seize market share, backed by government, banks, and policy,” Huang said.
Tai, the researcher at Taiwan’s CIER, described how CCP-backed companies were able to scale the battery industry’s high entry barriers by learning from foreign designs, then lowering the quality of the Chinese product to the bare minimum.
“Japanese firms are rigorous and match their materials well; you rarely hear of Japanese batteries catching fire or exploding,” he said, noting the importance of proper matching in lithium batteries.
‘Unplugging Beijing’?
Tai believes that the rapid growth of Chinese battery companies is bound to be temporary, likening their rise to “brilliant but short-lived fireworks.”Chinese companies fail to engage in the true innovation required to establish lasting brand recognition or make independent advances in the field, he said. Instead, their business model relies on copying foreign technology with the intent of qualifying for Beijing’s generous subsidies.
The FDD’s report “Unplugging Beijing” describes the paradox of China’s EV and battery strategy: Though China exploits foreign markets, its export-oriented economy is also ultimately dependent on those same markets.
This gives the United States and other market economies the ability to push back and compel Beijing to choose between following international norms or losing access to global trade.
“In this instance, the parasite cannot afford to kill off its host,” the report said of communist China. “We can confront China with the unpleasant choice of accepting certain basic rules or losing access to our markets.”
Huang, the Taiwanese economist, said that the rapid pace of China’s industrial advance is forcing governments around the world to confront the threat posed by the CCP’s policies.
In particular, neither the United States nor the European Union can afford to let Beijing crush their battery or EV industries, and they have begun to impose tariffs on Chinese counterparts, he said.
“Policies like [President Donald] Trump’s trade decoupling from China will gradually reveal the damage caused by the CCP’s overinvestment,” Huang said.
The FDD’s report recommends a more proactive approach by the United States to counter China’s current advantages in the battery industry, such as incentivizing private investment, easing federal permitting, creating national reserves of critical resources, establishing economic zones, and boosting domestic refining.
Su, the INDSR researcher, said that the United States and Europe have a number of options for countering Beijing’s advantages in the battery industry, such as leveraging their superiority in battery tech advances and cooperating with partners around the world, including those in South and East Asia, to contain China.
In particular, he said, the United States should work closely with Japanese and South Korean companies—the biggest existing rivals to China’s industrial prowess—to wean off dependence on Chinese production.
