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Climate Economics Opinion

Low Energy Costs have Pushed China to the Top of the Global Chemical Industry

1 day ago
Eric Worrall
10 Comments

Essay by Eric Worrall

Europe is threatening anti-dumping investigations. But the only thing Europe should dump is their Net Zero insanity.

China’s soaring chemical exports threaten new trade war front

Output has almost doubled in some key ingredients in five years, putting pressure on foreign rivals

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. …

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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.

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In July, it [China] 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”.

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Read more: https://www.ft.com/content/2962ad57-cee1-4a63-82ba-17acfc09d812?syn-25a6b1a6=1

US chemical industries are also under threat from Chinese competition.

China’s energy cost advantage is an entirely plausible explanation for what is happening in the global chemical market. Synthesis of high value chemicals is energy intensive. China has cheap energy.

Regardless of whether China is providing state support for its chemical industry, or funding green economic sabotage in the West, or any other dirty tricks, until that fundamental Chinese low cost energy advantage is addressed by bringing down Western energy prices by any means necessary, in the long run there isn’t anything anyone can do to defeat China’s ability to outcompete other nations.

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10 Comments
ResourceGuy
November 5, 2026 2:05 pm

How else does China dominate in polysilicon ingot supply chains, highly automated solar panel assembly lines, aluminum, steel, smelting and refining? All of those are electricity intensive sectors.

14
B Zipperer
Reply to  ResourceGuy
November 5, 2026 5:56 pm

RG:
Yep, China’s longterm policies of subsidizing heavy industries required an all-of-the-above energy push with emphasis on dispatchable generation. The wind & solar arm was mainly to
1) supply the world’s gullible NetZero crowd, 2) make a lot of money, 3) keep the Chinese population docile by keeping them employed, and 4) weaken their economic & geostrategic competitors (wind & solar make e-grids more fragile). China does not depend upon wind/solar.
They are laughing all the way to the bank – at the EU & US.
Primary steel production needs coking coal, while recycling steel uses huge amounts of electricity.

9
mleskovarsocalrrcom
November 5, 2026 2:53 pm

It’s more than just low energy costs. Add low wages, limited environmental controls, and lack of red tape to the list.

14
John E
November 5, 2026 5:48 pm

China is winning. And with the election – perhaps they have won.

4
ResourceGuy
November 5, 2026 7:00 pm

No wonder the market is selling off. China winning just moved higher after the US begins another blind policy contraction undoing industrial strategy again. The service unions win and AI plus all goods investing stalls.

3
Bob
November 5, 2026 8:37 pm

I struggle with stories like this. China is not like us, there is a lot more going on than energy giving China an edge. China lies and cheats. It is paraded around as a climate change super warrior while at the same time not only generating with every coal plant available but building more as fast as they can. While we in the west shut down perfectly good coal generators, generators operating far more cleanly than most. Worse some of us blow them up so they can never be restarted. That isn’t brilliance or efficiency on China’s part rather absolute ignorance on our part. We in the west pay a high price for our regulations such as environmental and labor regulations. Not to say some regulations aren’t desirable but we are clearly over regulated in most areas. China doesn’t bother itself with such niceties. It will do what ever has to be done to whip the snot out of us with no internal repercussions. The one place where they shine spending money is spying on the west and I believe they are getting more than their money’s worth. There is much more but I have said enough, we should never compare ourselves to China without admitting that they are going to lie, cheat, steal and do what ever they have to to appear to best us. On a level field we would knock their socks off, but that won’t happen dealing with the likes of China.

8
Eric Worrall
Author
Reply to  Bob
November 5, 2026 8:45 pm

Having been on the receiving end of CCP bullying for the crime of helping the Taiwanese government I have no love for the Chinese government. But they are getting energy policy more right than any western country.

11
Denis
November 6, 2026 4:30 am

“…in the long run there isn’t anything anyone can do to defeat China’s ability to outcompete other nations.”

Indeed. We have to rely on the time-proven ability of socialist economies to destroy themselves through countless bad decisions by the rulers. None has ever survived for long. Even China, realizing the danger, is no longer entirely socialist but has switched in part to Fascism where some private property is permitted so long as the owner does with it what the rulers command.

2
Peter Barrett
November 6, 2026 4:41 am

How did our “ruling classes” allow the situation to arise whereby we rely on countries like China for the majority of our drug precursors? Or perhaps it was a deliberate strategy?

3
MR166
Reply to  Peter Barrett
November 6, 2026 6:27 am

The Western “ruling classes” are owned and paid for by China. Our professors and teachers are fully indoctrinated socialists as is the MSM. Control the minds of the children and you will control the world.

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