【By Liu Bai, Observer Net】China's series of trade countermeasures this week delivered a shock to the White House. In addition to tightening restrictions on rare earth exports, China's control over the export of high-end lithium-ion batteries is seen as another card in its hand to strike against U.S. unilateral bullying.

Bloomberg published an opinion article on October 11, stating that China's export restrictions on certain lithium batteries and related materials will take effect next month. Given China's dominant position in the battery industry and the surge in U.S. demand for battery energy storage, this move may have a significant impact on U.S. companies.

China announced that starting from November 8, 2025, it will implement export controls on certain lithium batteries, key positive and negative electrode materials, as well as manufacturing equipment and technologies, to safeguard national security and fulfill international obligations such as non-proliferation.

The article directly pointed out that China previously used rare earths as a tool in its trade game with the U.S. Now, as the U.S. increasingly needs energy storage facilities to support data center operations and stabilize the grid, it has become heavily dependent on Chinese batteries, and China has found another leverage point in trade negotiations.

The Chinese measures cover a wide range of the battery supply chain, including large lithium-ion batteries used for energy storage, as well as positive and negative electrode materials and battery manufacturing equipment—areas where China has strong leading advantages. Like previous restriction measures, the new regulations require battery companies to obtain a license from the Ministry of Commerce before exporting products, a system that allows China to selectively use exports as a "weapon."

On May 27, 2025, staff members walk around the facility of Energy Valley Company in Calistoga, California. Visual China

Matthew Hales, an analyst at Bloomberg New Energy Finance specializing in trade and supply chains, said: "Although this is not as impactful as other Chinese export control measures across industries, China's dominant position in the battery supply chain means it can exert significant pressure, and U.S. companies will soon feel it."

According to Bloomberg's latest data, in the first seven months of this year, lithium-ion batteries of grid scale from China accounted for about 65% of U.S. imports. Analysts say these types of batteries are among the first targets of China's latest restrictions.

With the booming development of artificial intelligence driving a surge in energy demand, battery storage is crucial for the U.S. A report from the Lawrence Berkeley National Laboratory stated that from 2017 to 2023, electricity consumption in U.S. data centers more than doubled. The report noted that by 2028, this number is expected to triple.

Amy Killecris, director of the Energy, Economics, and Security Program at the Center for a New American Security, said although China's AI development is limited by its ability to access advanced U.S. chips, "energy demand is also a constraint on the infrastructure of U.S. AI data centers."

Large batteries help store excess renewable energy and release it when power is needed. This helps avoid blackouts and enhances grid stability. Ten years ago, the U.S. had almost zero utility-scale battery capacity, but in 2024, it reached 26 gigawatts. Just in Texas, about 4 gigawatts of battery capacity was put into operation last year, enough to power about 3 million homes.

Bloomberg New Energy Finance said that over the next decade, the U.S. is expected to add up to 136 gigawatts of battery capacity. Hales said a large portion of this supply will need to come from China, and it is difficult to be easily replaced by other countries.

In recent years, U.S. battery manufacturing capacity has increased, but it still cannot meet domestic demand for energy storage. These factories will also be affected by China's new restrictive measures. Bloomberg New Energy Finance said that China controls about 96% of global negative electrode material capacity and 85% of positive electrode material capacity.

Cory Kumms, a researcher at Trivium China who focuses on critical minerals and supply chains, said that China's inclusion of these key components in export controls is a "major upgrade," because companies outside China are highly dependent on them.

Selina Mikolajczyk, a battery industry executive who previously oversaw battery manufacturing at Tesla and Panasonic's Nevada Gigafactory, said: "Many newly built battery factories in Southeast Asia will be affected, as this involves their raw material supply."

After the implementation of China's measures, Fluence Energy's stock fell over 12% on the 10th, marking its largest single-day drop since August 12, and Tesla's stock also dropped 5%. Both companies partially rely on Chinese battery components.

Dennis Fales, CEO of Dragonfly Energy, a battery manufacturer with an assembly plant in Nevada, said that China's policy measures "add another layer of complexity to an already strained global supply chain and highlight the importance of accelerating domestic innovation." He added that as part of the company's long-term plan, they are actively working to reduce reliance on Chinese-purchased components.

Some analysts believe that China's measures are not only a source of leverage in trade negotiations, but also a way to maintain a competitive advantage.

Illaria Mazzocco, a senior researcher at the Center for Strategic and International Studies (CSIS) focusing on China's clean energy industry, said that China has clearly stated it does not want to leak core technologies. "I think they really want to become the dominant force in this industry in the coming decades."

Facing the U.S. government's bullying attitude, China has shifted from passive defense to active rule-making in the game, and retaliated using the tools and language most familiar to the U.S.

On October 9, the Ministry of Commerce and the General Administration of Customs issued four announcements consecutively, announcing export controls on superhard materials-related items, certain rare earth equipment and raw materials, certain medium-heavy rare earth items, lithium batteries, and artificial graphite negative electrode materials.

When asked about the above controls, the spokesperson for the Ministry of Commerce emphasized that the items listed are clearly dual-use, and China's export control measures are implemented in accordance with laws and regulations, consistent with international practices, better safeguarding national security and interests, and better fulfilling international obligations such as non-proliferation. The Chinese government is willing to work with all countries to maintain the stability and smoothness of the global production and supply chain. The relevant measures do not target any country or region, and for legal and compliant export applications, the Chinese government will approve them after review. At the same time, the Chinese government is willing to engage in communication and dialogue with relevant parties through bilateral export control dialogue mechanisms on export control policies and practices, jointly promoting and facilitating compliant trade.

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