Technicians test lithium-ion battery production equipment at a factory in Jinhua, East China's Zhejiang Province. Photo: VCG

China's Ministry of Industry and Information Technology (MIIT) on Wednesday unveiled revised guidelines for the lithium-ion battery industry to further strengthen standardized management and promote the high-quality development of the sector.

Observers said that the move is aimed at fostering the high-quality development of the vital sector, which has high demand overseas.

The move reflects China's determination to continue scaling up the technological ladder, retain its leadership in core technologies and protect its environment to ensure sustainable development, they said.

The guideline, issued following a proposal in May and effective from Thursday, will guide lithium battery makers to reduce manufacturing projects that "purely" expand production capacity.

They are being urged to close or curb projects built on farmland or in ecological zones. Industry insiders said it is urgent to address some of the issues, such as a capacity glut and slowdown in innovation, faced by the industry.

Along with NEVs and photovoltaic products, lithium-ion batteries from China have gained wide popularity in the global market and are together known as the "new three." 

However, the introduction of large volumes of quantities of production capacity recently has resulted in the prices of lithium-ion batteries to drop in China and in overseas markets.

In May, China exported 320 million lithium-ion batteries, an annual increase of 4.8 percent, while the value slumped by 16.1 percent to $4.64 billion, Chinese financial news portal Caixin reported on Tuesday, citing customs data. 

In the January-May period, the number of batteries exported grew by 4 percent while the value dropped by 17.4 percent.

Cui Dongshu, secretary-general of the China Passenger Car Association, told the Global Times on Wednesday that the revised guideline will further ensure the healthy development of China's lithium battery industry and redirect the emphasis of development from scale to innovation.

China's lithium battery industry has kept up a rapid pace of growth in recent years in scale, but it's been relatively slow in technology upgrades, said Cui. "The low manufacturing cost that resulted from an expanded industry scale without sufficient technology upgrades will cap the development of the whole industry," he noted.

In the global lithium battery market, Cui pointed out that China has a clear advantage in manufacturing costs. "However, to further take root in overseas markets and avoid risks such as sanctions, accelerating technology upgrades is essential," he said.

Cui noted that the new guidelines will further eliminate domestic backward production capacity, and cement Chinese companies' international competitiveness. 

Many Western countries, including the US, have tried to reduce their reliance on Chinese batteries but have failed.