BLOG: Two connected words of the year for 2025: “Protectionism” and “China”

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson.

Lots of focus has been on the Trump effect on the US trading relationship with China. But we need to think more broadly than this. I see a significant risk that next year we will see trade tensions also increasing between other countries and China for the reasons described in today’s post.

See today’s, main slide, showing China’s percentage shares of global capacities for some polymers in 2009 (the beginning of China’s giant economic stimulus programme) versus 2021 (the Evergrande Turning Point) and 2025.

Producers elsewhere, seeing charts such as this one, could be anxious to protect market share and avoid commoditisation for polymers such as acrylonitrile butadiene styrene (ABS) and ethylene vinyl acetate (EVA) which can be higher value in some end-use applications.

In polypropylene (PP), China’s share of global capacities was just 15% in 2009 and 26% in 2021. ICIS forecasts this will next year jump to 45%. We have already seen an uptick in protectionist measures against Chinese PP.

More broadly, China’s investment in export-based manufacturing capacity has accelerated since late 2021 to compensate for the end of the property bubble.
China has dominated exports of finished goods for 20-odd years. But ICIS data, such as today’s first chart, and other data show that this has gone to a different level since the end of 2021.

International trade used to be a win/win game, but the data suggest that China has recently gained stronger positions in low, medium and high-value manufacturing.

What form will any increase in protectionism take in 2025? To what extent could it be short-term our “knee jerk” versus further strategic initiatives to reshore manufacturing?

To what degree is it too late for strategies in some countries and regions? I’ve been recently polling people on the German auto industry. It is too late to turn around the decline in the industry, was the majority view. If true, this would obviously have huge implications for Germany’s chemicals companies.

If “protectionism” and “China” are the words of the year in 2025, expect chemicals trade flows and pricing patterns to be significantly reshaped by announcements of investigations into new duties and the imposition of duties.
Keeping on top of news on trade protectionism, especially if you can get the news before your competitors, will be a significant competitive advantage.

And every action can promote a reaction. We must consider how China might respond to more duties. Its responses will of course also affect chemicals trade flows, pricing patterns and demand in different regions.

Good luck out there. Next year is going to be very, very challenging for reasons beyond just protectionism.

Editor’s note: This blog post is an opinion piece. The views expressed are those of the author, and do not necessarily represent those of ICIS.