China’s Chemical Industry Hopes for a Turnaround in 2025 as Global Production Set to Rise by 3-4%

SHANGHAI, July 14, 2025 — In the year 2000, Chinese chemical industry share was 6 per cent of the global chemical industry.

By 2022, the industry represented 45 percent of the global chemical industry, a rapid growth by any standard, according to data available with sources including IHS Global Insight, CRISIL report, and World Bank.

As per the UN Comtrade data, in terms of exports, in 2023, China was the largest exporter of chemicals, with 23 percent of the total global exports.

The total chemical trade in 2023 stood at $1.4- $1.5 trillion.

Chemical Import, Exports

With a share of 18 percent, US was the second largest importer of chemicals in 2023.

A group of importing countries, as revealed by UN Comtrade data, had 34 percent share, as the total imports stood between $1.4 - $1.5 trillion. 

The chemical industry continues to face several challenges, including environmental and safety concerns. 

Besides, a low value addition for production is also a potential improvement area. Amid a constant pressure to bring down the high carbon emissions, Chinese chemical industry hopes for a turnaround in 2025.

Chemical industry in China is facing huge pressure globally, to reduce high carbon emissions.

The ambitious objective of “peaking carbon emissions and carbon neutrality”, will see China strive to reach the peak of carbon dioxide emissions by 2030 and achieve carbon neutrality by 2060.

Vision documents issued by the Chinese government are a policy measure, which urges all production sectors to reduce carbon emissions.

Increase in Chemical Industry Capex

As per Bureau of Statistics data, there has been a significant in the CAPEX of the Chemical industry in China.

This is largely driven by growth of foreign investments in the country.

During 2010, China saw $90-$100 billion CAPEX, which reached $360-$370 in 2023. The recent MNC investments in China, which also includes top global energy players, includes Sabic, Saudi Aramco, Shell NOOC, Exxon Mobil, Covesto, and others.

As an important contributor to economic activity, the chemical industry has high energy consumption, high pollution, and high carbon emissions.

The chemical industry is facing great pressure on carbon emission reduction. The path of carbon emission reduction and achieving carbon neutrality in the chemical industry has become one of the research focuses internationally.

Overcoming the Slump

Head honchos at the Chinese chemical companies are hopeful for a bounce back in 2025. Beginning September last year, Chinese government started rolling out massive economic stimulus measures, including loans of more than $1.3 trillion to help local governments pay their debts and stimulate their economies.

A sizeable amount of the funds went to state-owned enterprises to buy unsold properties and use them for low-rent apartments.

A chunk of the funds went to state-owned enterprises to buy unsold properties and use them for low-rent apartments. As a result of such measures, the real estate market in big cities like Beijing and Shanghai has stabilized, though the sector remains in a slump nationwide.

“With the decline in raw material costs and the gradual recovery of downstream demand, the supply and demand structure of the chemical industry is expected to improve and the business atmosphere will pick up,” says Yang Lin, chief chemical industry analyst at Guosen.

Value Addition

Fluctuating inventory levels over the last five years, saw emergence of the destocking and restocking cycle, a process that has worked against the companies to temper.

With a short-term growth in sight, there is a possibility that long-term demand will moderate.

Topmost chemical companies, have developed distinctive solutions that accelerate and enable broader megatrends. These solutions have included pioneering lightweight materials in automotive applications, enabling miniaturization in electronics, and extending shelf life in food packaging. The ability to identify and invest in innovations has proven to be a key differentiator for outperformers in this sector.

Today, leading companies are working with their customers and other stakeholders to offer solutions in promising areas such as recycled materials, the microbiome and personalized nutrition, carbon removal, and advanced water purification. Additionally, the energy transition and the burgeoning climate technology sector are spurring innovations in the hydrogen economy (for example, advanced membranes and storage materials), water treatment solutions (for example, advanced filtration and bioprocessing), and next-generation batteries (for example, sodium solid state and sulphur cathodes).

While long-term growth may slow for the chemicals industry, bold and innovative companies should still be able to capture value.

Inputs from Saqib Malik

Editing by David Ryder