Entering the chemical industry in China is a hard task for any company that wants to establish its own chemical products there, and a different task for a company that wants to source chemical products from China, which is now the more common case. This report gives both a working grasp of the chemical industry in China as it stands in 2026: its size, its supply and demand, its value chain, and the product categories that matter to a buyer.
China’s Chemical Industry
A. Industry description
The scale of the chemical industry in China outran every forecast. In 2005 Deutsche Bank predicted 10% annual growth and a 13% global market share within a decade; by 2013 China’s share had reached 33%, and it now accounts for 46% of global chemical sales, nearly four times Europe’s 13% and more than the United States, Europe, and Japan combined (Cefic, Facts and Figures 2025).
China has also become the largest source of chemical imports into the EU, at €17.1 billion in the first half of 2025 alone, and the destination for the majority of the world’s chemical investment. The domestic market is the driver: China’s GDP growth of around 5% a year, and its position as the world’s largest manufacturer of everything that uses chemicals, plastics, textiles, electronics, vehicles, and construction materials, generate more chemical demand than any other economy.
B. Supply
The chemical industry in China was once an outlet for the world’s excess chemical production. That has reversed. Local companies have expanded capacity enormously since 2015, often in exactly the products China used to import, and the country is now a net exporter across a wide range of basic chemicals, polymers, and increasingly specialities.
The build-out has been in naphtha crackers, propane dehydrogenation, and coal-to-olefins plants for basic petrochemicals; in polymer capacity for polyethylene, polypropylene, PVC, and engineering plastics; and in fine and speciality chemicals, where Chinese producers now supply most of the world’s active pharmaceutical ingredients, agrochemical intermediates, and battery materials. The result is overcapacity in many basic chemicals, low domestic prices, and export volumes that have prompted anti-dumping investigations in the EU, India, and elsewhere.
C. Demand
Demand in the chemical industry in China has risen with the economy and shifted in composition. China remains by far the largest importer of the organic chemicals it cannot yet make enough of, paraxylene, ethylene glycol, methanol, styrene, and benzene among them, and integrated circuits aside, chemicals and crude oil are its largest import categories. Demand for methanol as a cleaner feedstock and for aromatics as gasoline blending components has grown, and the fastest-growing chemical demand is now in battery materials, lithium, cobalt, nickel, and graphite compounds, for the electric vehicle industry, and in the speciality chemicals that electronics and semiconductor manufacturing require.
Value Chain of the Chemical Industry in China
The chemical industry is among the largest and most diversified in the world, and its value chain runs in four stages from raw materials to finished chemical products. In China, all four stages are present at scale, which is what makes it possible to source a finished chemical product and its inputs from the same region.
A. Raw materials and petrochemicals
The value chain starts with raw materials: crude oil, natural gas, coal, and metallic and non-metallic minerals, obtained by drilling and mining and then refined or processed. Petrochemicals, extracted from oil, refined products, or gas, are the basis of synthetic rubber, fibres, plastics, fertilisers, paints, detergents, and pesticides. The chemicals produced at this stage include olefins such as ethylene and propylene, polyolefins such as polyethylene and polypropylene, aromatics, and industrial gases. China’s distinctive feature at this stage is coal: coal-to-olefins and coal-to-methanol give the chemical industry in China a feedstock route no other major producer uses at scale, which insulates it partly from oil prices.
B. Basic chemicals
Basic chemicals are produced from the raw materials and used by manufacturers across the economy to make dyes, detergents, cleaning products, plastics, paints, drugs, and fertilisers. The processes are synthesis, distillation, thermal cracking, and polymerisation, and the products include intermediates such as tetrahydrofuran and hexamethylene diamine, and inorganics such as ammonia, caustic soda, and sulphuric acid. China is the largest producer of nearly all of them.
C. Polymers
The third stage is polymers, which are used mainly to make plastic goods and account for around 80% of the chemical industry’s output by volume. Polymers are the most widely used material per unit volume in the world, more than steel, copper, and aluminium combined. Polymer plants are large and capital-intensive, combining batch and continuous processes, and their feedstocks, ethylene and propylene above all, come from the petrochemical stage. Their customers are the converters that turn polymer into plastic products, and China is home to more of them than any other country; the plastics manufacturing process article covers that stage in detail.
D. Specialties
Speciality and fine chemicals are the fourth stage: additives, coatings, catalysts, electronic chemicals, pharmaceutical and agrochemical actives, and vitamins. They are complex, produced in limited volumes at high prices in multipurpose plants, and used as the building blocks of proprietary products. This is the stage where the chemical industry in China has moved up fastest in the past decade, and where Chinese producers now dominate categories, from vitamin C to lithium iron phosphate, that were once Western or Japanese.
E. Distribution and sales
The final stage is marketing, wholesale distribution, and sale of chemical products to the manufacturers who transform them into consumer goods. In China this stage is fragmented among thousands of traders and distributors, which is why a foreign buyer usually works through an agent or a sourcing partner to reach the actual producer.
F. The importance of logistics in the value chain
Logistics is critical in the chemical industry because many chemicals are hazardous. Transport has to be planned and controlled at every stage from plant to end user: the right containers, real-time tracking of location and condition, and security against diversion. China’s chemical logistics have professionalised considerably since a series of major accidents in the 2010s, and the regulatory regime for hazardous goods, from plant location to transport licensing, is now strict and strictly enforced.
For an exporter, that means chemical shipments from China require documentation, classification, and packaging to UN standards, and a supplier who cannot produce a safety data sheet and a dangerous-goods declaration should not be shipping chemicals.
Product Categories in the Chemical Industry in China
1. Industrial inorganic chemicals
Producers of inorganic chemicals not classified elsewhere, including those mining and preparing potassium, sodium, and boron compounds, industrial gases, acids, alkalis, and pigments. China leads the world in most of these.
2. Plastic materials, synthetic resins, and synthetic rubber
Producers of the polymers that plastics, fibres, and rubber goods are made from: polyethylene, polypropylene, PVC, PET, polystyrene, ABS, and engineering resins, and synthetic rubbers for tyres and industrial goods. This is the category most relevant to a brand sourcing plastic products, and the category in which the chemical industry in China has the deepest capacity.
3. Pharmaceuticals
Producers of active pharmaceutical ingredients, intermediates, and finished drugs. China supplies a large share of the world’s APIs and most of its antibiotics and vitamins, and it has become a significant producer of finished generics and, increasingly, innovative drugs.
4. Paints, varnishes, lacquers, enamels, and allied products
Producers of coatings for construction, industry, vehicles, and consumer goods. China is the largest coatings market in the world and a major exporter, particularly of powder coatings and industrial finishes.
5. Industrial organic chemicals
Producers of organic intermediates, solvents, aromatics, and the building-block chemicals that other categories depend on. This is the category in which China remains a large importer as well as a producer.
6. Agricultural chemicals
Producers of fertilisers, pesticides, herbicides, and fungicides. China is the world’s largest producer of nitrogen and phosphate fertilisers and of agrochemical actives, and it controls fertiliser exports through quotas and inspection regimes to protect domestic supply.
What the Chemical Industry in China Means for a Buyer
For most companies, the relevance of the chemical industry in China is indirect: it is the reason the plastics, coatings, textiles, batteries, and packaging they source from China are cheaper and more available there than anywhere else, and the reason a Chinese factory can offer a wider material choice than a competitor elsewhere.
For companies sourcing chemical products directly, the industry offers unmatched capacity and price and demands unusual care: supplier verification, hazardous-goods compliance, quality and purity testing, and attention to the export controls and anti-dumping measures that now apply to a growing list of Chinese chemical products. Both cases are within the scope of our product sourcing service and our quality assurance work, and for plastic products specifically, our plastics production package starts from the resin.
