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China tech

China's Xi has mixed feelings on CATL battery market dominance

President warns companies need to balance development and security

Chinese President Xi Jinping attends the opening ceremony of the National People's Congress in Beijing on March 5. (Photo by Yusuke Hinata)

SHANGHAI (Reuters) -- Chinese President Xi Jinping told CATL on Monday he had mixed feelings about its status as the world's largest battery maker -- remarks that come at a time when the company is rapidly expanding abroad and moving to undercut domestic rivals.

After a presentation by CATL Chairman Zeng Yuqun who described how the company commands 37% of the global battery market, Xi was quoted as saying that he was "both happy and worried," glad about its leading position but concerned about the risks.

Xi was speaking in a closed-door meeting with industry and commerce representatives on the sidelines of the annual session of parliament, according to a statement published by the official Xinhua News Agency on Tuesday.

CATL has been building factories overseas and last month agreed to license its technology to a new plant Ford Motor Co is building in Michigan.

It has also offered to cut costs for Chinese automakers, sources have said, seeking to knock back challenges from smaller domestic rivals such as CALB and EVE Energy which have factories ramping up this year.

"Emerging industries must do a good job in planning, figuring out how big the market is and where the risks are. They should avoid marching ahead alone in an invincible fashion, only to be caught out by others and fail in the end," Xi was quoted as saying.

Xi added that companies need to balance development and security.

CATL did not immediately respond to a request for comment. Xinhua did not say whether Zeng had responded to Xi.

Its shares fell 1.6% on Tuesday, in line with a decline in China's blue chip CSI300 Index.

Beijing has in recent years tightened its grip over the country's biggest companies, regulating how they do business in and outside China on areas from fundraising to data security.

At the same time, it has come under growing pressure from Washington which has restricted Chinese companies' access to advanced AI chips and other semiconductors, citing national security.

In an expansion of these tensions, Republican senator Marco Rubio last month asked the Biden administration to review CATL's deal with Ford saying that it would deepen U.S. reliance on the Chinese Communist Party for battery technology.

China also plans to scrutinize the deal to ensure the Chinese company's core technology is not shared with the U.S. automaker, Bloomberg reported last month.

Dong Yang, an official from China EV100, the country's leading auto industry think tank, this week published a lengthy defense of the deal, saying the benefits of the collaboration far outweighed the risks of technology being leaked.

The Ford-CATL partnership will be win-win for both parties without threatening China's leadership in the EV industry, Dong wrote.

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