China business faces new challenges as EU pushes clean-tech localization
The European Commission has proposed sweeping legislation to strengthen domestic manufacturing in green technology, imposing strict local-content requirements and investment limits on sectors including electric vehicles, batteries and solar panels. Unveiled Wednesday, the draft Industrial Acceleration Act would introduce a “made in the EU” mandate for projects seeking public procurement contracts or state subsidies, marking the bloc’s most aggressive push yet to rebuild its industrial base and reduce reliance on foreign supply chains.
The proposal is widely seen as targeting China, which dominates global manufacturing in several clean-tech sectors and has rapidly expanded exports of low-cost products to Europe. The China Chamber of Commerce to the EU warned that mandating high-cost local components would raise production expenses and erode the global competitiveness of European manufacturers. It also criticized investment restrictions — including limits on foreign ownership and technology licensing requirements — as barriers to capital flows and forced technology transfers, adding that excluding China from the “trusted partner” list amounts to systemic discrimination.
China’s power equipment exports jump 26%
China’s exports of power equipment rose 26% to $37.4 billion in 2025, extending a three-year growth streak as emerging economies accelerate investments in electricity infrastructure. Transformers and power cables were the main growth drivers, accounting for about 41% of total export value, according to the China Chamber of Commerce for Import and Export of Machinery and Electronic Products (CCCME). Saudi Arabia became the fastest-growing and second-largest destination for Chinese power equipment in 2025, accounting for 5.3% of shipments, up sharply from 1.3% in 2023. The U.S. remained the largest single market, though its share fell to 6.3% in 2025 from 8.3% two years earlier as tariffs and procurement restrictions tied to national security concerns created obstacles for Chinese suppliers.
Iran conflict ripples through China’s chemical markets
The Middle East conflict is driving up prices of methanol and other chemicals in China as geopolitical tensions fuel concerns over supply disruptions. China’s benchmark methanol futures contract closed up 3% at 2,553 yuan ($369.6) a ton on March 4, after hitting the daily limit in the previous two sessions. Prices slipped 0.85% intraday on March 5 as traders saw the rally as driven mainly by geopolitical sentiment rather than fundamentals. The Strait of Hormuz is one of the world’s most critical shipping routes. Methanol shipments through the strait accounted for 32% of global trade in 2025, alongside large volumes of crude oil and liquefied natural gas, according to shipping data provider Kpler.
Prices of other feedstocks have also risen. Straight-run naphtha prices in Shandong province jumped more than 5% on March 4 from a day earlier to 7,500 yuan to 7,600 yuan a ton, driven by higher oil prices and rising shipping costs through the Strait of Hormuz, according to Oilchem.net. Purified terephthalic acid (PTA) futures — a key raw material for polyester fibers and packaging — also strengthened. The main contract rose 5.5% intraday on March 5 after gaining for three consecutive sessions.
Middle East turmoil sparks three-day rout in lithium market
Chinese lithium carbonate futures fell for a third straight session Wednesday amid mounting concerns that an escalating conflict in the Middle East could disrupt exports of energy-storage products to one of the industry’s fastest-growing markets. The benchmark May 2026 lithium carbonate contract closed at 153,000 yuan ($22,148) a ton on Wednesday, down 3%. The contract, which hit its daily limit down Tuesday, has slid 14% over the past three days. The Middle East has become a major destination for Chinese energy-storage products, with order volumes trailing only the U.S. and Australia. Saudi Arabia and the United Arab Emirates ranked as the third- and fifth-largest overseas markets for Chinese suppliers in 2025, with orders of roughly 20 gigawatt-hours (GWh) each, according to the China Energy Storage Alliance.
