China's power battery recycling industry is rapidly reshaping toward standardization, specialization, and scale, with an overall positive trajectory. However, it faces challenges such as fragmented and chaotic recycling practices, restricted development of echelon utilization, and fluctuating economic viability of recycling. The preliminary recycling system has built over 15,000 recycling service outlets, and a policy framework centered on extended producer responsibility has taken shape. Competitive enterprises achieve over 98% recovery rates for nickel, cobalt, and manganese, with examples like NIO’s closed-loop recycling model via its BaaS battery leasing system. Currently, the key challenges are fragmented market with over 100,000 enterprises leading to unregulated competition that make the recycling channel inefficient and price wars toward small manufacturer. Not only that, strict regulations limiting large-scale echelon use in energy storage and e-bikes and hurdles in overseas expansion, such as the EU’s restrictions on black mass exports despite China’s relaxed import rules. In future it should be strengthening cross-departmental supervision with blacklists and mandatory lifecycle tracing by setting up a standards for recycled material usage and carbon emission thresholds. Also, build advance smart technologies for dismantling and management, have a refining "battery passport" standards, and developing differentiated recycling routes for various vehicle types.