1、 itif.org How Innovative Is China in the Chemicals Industry?ROBERT D.ATKINSON|APRIL 2024 China is leading in chemical production,especially basic chemicals.And while it is currently lagging behind on innovationespecially in more complex fine chemicalsall signs suggest it will catch up with the globa

2、l leaders within the next decade or two.KEY TAKEAWAYS The chemicals industry is enormous and underpins most economic activity,potentially creating key vulnerabilities if production is dominated by allied adversaries.China seeks to initially become self-sufficient in chemicals and to then lead the in

3、dustry globally.China is already the largest chemicals market in the world,giving Chinese producers a key advantage in their home market.In 2022,China accounted for 44 percent of global chemical production and 46 percent of capital investment.Chinese chemical firms are strong in basic chemicals wher

4、e innovation plays a lesser role,but are focusing on gaining global market share in fine chemicals and consumer chemicals.Indicators of chemical innovation,including patents,R&D spending,and most highly cited scholarly articles all show rapid progress by Chinese chemical firms.Given past development

5、s in China in other industries,it is likely that the country will be on par with foreign chemical producers in terms of innovation in the moderate term at the latest,while enjoying a significant cost advantage.Absent coherent policy responses by Western nations,Western company shares of chemical pro

6、duction will likely fall significantly.INFORMATION TECHNOLOGY&INNOVATION FOUNDATION|APRIL 2024 PAGE 2 CONTENTS Key Takeaways.1 Introduction.2 Background and Methodology.2 Chinas Chemicals Industry.3 Assessing Chinese Chemicals Industry Innovation.5 Innovation Data.7 Company Case Studies.10 Wanhua Ch