China’s soaring chemical exports threaten new trade war front

{"text":[[{"start":7.72,"text":"China has nearly doubled its chemicals capacity in some areas in just five years and now accounts for about half of global output of certain products, putting pressure on foreign rivals and threatening to open up a new front in its trade war."}],[{"start":21.36,"text":"A report published on Monday by the Washington-based Rhodium Group found that China’s industry was moving into more profitable, higher-end segments formerly dominated by foreign companies, raising the prospect of further tensions with the EU and US."}],[{"start":36.28,"text":"Chinese producers were displacing foreign counterparts across many different production and supply chain channels, said Jeremy Smith, Rhodium analyst and author of the report, which was compiled on behalf of the US Chamber of Commerce."}],[{"start":49.9,"text":"Not only were “China’s exports to advanced economies rising” but “China has been displacing foreign sales in its own market quite rapidly and . . . outcompeting incumbents in the faster-growing emerging markets”, Smith said."}],[{"start":62,"text":"The chemicals industry is at the forefront of disputes over China’s trade surplus, which is on track this year to exceed 2025’s record of $1.2tn."}],[{"start":71.96,"text":"The EU, which is concerned that its chemicals industry could be outcompeted by lower-cost Chinese rivals, opened three anti-dumping investigations into imports from China in September. Beijing, which rejects accusations that it is tolerating industrial overcapacity, retaliated by launching an anti-dumping investigation into European exports of a chemical used for dyes and pharmaceuticals."}],[{"start":null,"text":"

"}],[{"start":95.12,"text":"China’s commerce ministry did not immediately respond to a request for comment on the report."}],[{"start":100.4,"text":"In July, it defended China’s growing exports, including of chemicals, saying that their competitiveness was partly down to “the energy crisis raising production costs in Europe’s chemical and other industries”."}],[{"start":111.84,"text":"The Rhodium report, however, found that China’s chemicals industry had also benefited from industrial policies and subsidies. Beijing has boosted investment in manufacturing to support economic growth and improve industrial resilience after a property sector implosion."}],[{"start":127.58,"text":"Between 2020 and 2025, production of important ingredients for plastics soared — styrene by 97 per cent, ethylene by 80 per cent, polyethylene by 75 per cent, polypropylene by 71 per cent and polyvinyl chloride by 15 per cent."}],[{"start":143.04,"text":"Although exports account for less than 10 per cent of China’s overall chemicals production, they have also been growing rapidly. Apart from ethylene, exports of the other four petrochemical products have grown by an average of more than 40 per cent each year over the five-year period."}],[{"start":159,"text":"China’s export share of PVC in India, for example, surged to 45 per cent in 2025 from 3 per cent in 2020. The combined shares of Japan, South Korea and Taiwan in the Indian market fell from 56 per cent to 34 per cent."}],[{"start":null,"text":""}],[{"start":176.14,"text":"Europe has blamed China for troubles in its industry. European chemicals capacity marked for closure has increased six-fold from 2.9mn tonnes in 2022 to 17.2mn tonnes in 2025, with the amount doubling in the last year."}],[{"start":192.16,"text":"Smith said the flood of cheap Chinese chemicals was affecting prices elsewhere even where China was not exporting, by affecting downstream production."}],[{"start":200.16,"text":"“There’s also the ‘embedded content’ flows, indirect flows of chemicals in all kinds of downstream products ranging from electronics to autos to appliances,” he added."}],[{"start":210.84,"text":"Despite the soaring production and rising exports, profits in China’s chemicals industry have declined over the past four years. Up to 31 per cent of chemicals producers and 29 per cent of plastics and rubber makers were lossmaking, the report said."}],[{"start":226.08,"text":"Inventories of chemicals, rubber and plastics have also soared, further weakening prices."}],[{"start":231.96,"text":"China had cut back investment as part of its “anti-involution” campaign, but reductions had mostly affected investment in new plants rather than removing capacity, the report said."}],[{"start":241.8,"text":"“The tricky thing is that chemistry is the industry of industries. You take the upstream away, it takes away a lot of possibilities for downstream,” said Joerg Wuttke, partner at consultancy DGA Group."}],[{"start":254.12,"text":"He said Europe did not want to become even more dependent on China and the US, another chemical exporter, but the global energy shock was driving up feedstock prices for the industry, particularly for fossil fuels."}],[{"start":266.32,"text":"“We are in the perfect storm. Gas prices in Europe are six times as high as the United States. How can you compete?” said Wuttke."}],[{"start":277.94,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1793621242_8313.mp3"}