For a detailed explanation of factors used to determine these Top Export Marking Rankings, including logic, data citations, and weighting, please see the Methodology section.
China has the largest real GDP (purchasing power parity) in the world. China is also the world’s single largest emitter, responsible for 31.6% of global greenhouse gas emissions. In September of 2020, President Xi Jinping announced China’s commitment to peak carbon emissions before 2030 and reach carbon neutrality by 2060 — all while striving to double the size of China’s economy by 2035. The World Bank estimates achieving these carbon targets will require investment of USD $2.1 trillion by 2030. Longer-term goals require even larger investments of USD $13.8 trillion in electricity and transport by 2060. With coal fueling 56% of China’s total energy production in 2021, the nation must make a swift and dramatic transition to cleaner technologies to meet its ambitions.
Meanwhile, the International Energy Association’s (IEA) World Energy Outlook 2023 predicts Chinese demand for energy is expected to continue growing until the middle of this decade, with the buildout of renewables outpacing fossil fuel infrastructure and ultimately lowering carbon emissions. IEA’s outlook also predicts that China’s economy will play an outsized role in global energy trends, such as changing patterns of demand for energy intensive sectors such as steel and cement.
U.S. clean technology companies contemplating expanding exports to the Chinese market should watch for policy developments and new implementation measures under China’s 1+N policy framework for achieving the 2030 carbon peak and 2060 carbon neutrality. Individual “N” sectoral action plans, such as the Action Plan for Carbon Dioxide Peaking before 2030 are expected to follow.
However, while economic indicators elevate China to the top ranked potential export market, U.S. companies should exercise significant caution due to various operational risk elements. China presents a challenging environment in which to do business and may be particularly unsuitable for new U.S. exporters or those expanding exports or breaking into Asian markets for the first time. For assistance assessing risk and navigating Chinese market opportunities safely, U.S. companies are strongly encouraged to contact the U.S. Commercial Service about their China-related trade and economic interests before engaging directly.
Carbon Capture: Carbon capture, utilization, and storage (CCUS) is critical to China’s path to net zero emissions. Goldman Sachs estimates that USD $800 billion of cumulative investment opportunity in industrial CCUS projects is needed to support China’s 2060 carbon neutrality target. China has a supportive policy environment for CCUS on national and provincial levels, but gaps remain in applying compulsory requirements to major emitters. China has many CCUS projects in the pipeline across a variety of sectors to demonstrate CCUS at a commercial scale; however, the market is still in its infancy. The Global CCS Institute cites 38 operational CCUS projects in China covering major industries (i.e., power, coal-to-chemicals, cement, oil and gas, methanol, fertilizers) — mostly in pilot or demonstration phases — and 11 CCUS projects in development. China’s domestic energy policies encourage coal-to-gas switching, which will continue to drive up demand for natural gas, in addition to renewable energy expansion. With increasing calls and actions in the international community against new unabated gas-fired generation infrastructure, a huge demand for carbon capture technology is anticipated. There are also opportunities for CCUS to decarbonize heavy industries like steel and cement. Additional policy incentives and regulatory frameworks need to be developed to overcome remaining challenges facing any large-scale deployment and commercial operation.
Methane Abatement: To meet its climate targets, China needs to reduce its 2020 methane emissions levels by 35-56% by 2030 and 46-66% by 2050. China’s most recent greenhouse gas inventory (2014) indicates that almost half the country’s methane emissions originate from the energy industry, with 38% generated by coal mining. The remaining emissions come from agriculture — particularly livestock and rice — as well as solid waste and wastewater. There is a strong need for monitoring and reporting systems. While the eventual phaseout of coal fired power plants will reduce demand for coal mining and mitigate the bulk of the long-term methane emissions, cleaner mining practices and technologies are needed in the short term to fuel China’s relatively young coal power fleet as well as the emissions associated with coal mines as they are progressively abandoned. Methane emissions from the oil and gas supply chain currently only represent a small share of China’s total methane emissions, but there are opportunities to deploy technologies that capture gas and provide leak detection and mitigation.
Green Building: Reducing emissions from buildings and heavy industry is vital for China to meet its climate targets. Buildings alone were responsible for 20% of China’s CO2 emissions in 2020. Although sustainable buildings make up a small percentage of China’s construction market to date, China is adopting increasingly stringent green building requirements, presenting opportunities for U.S. architecture, engineering services, and construction companies. Updates to China’s General Code for Building Energy Conservation and Renewable Energy Utilization require all new urban buildings to be constructed using green building standards by 2025, up from the previous requirement that 70% of new buildings be green.
Civil Nuclear Energy: Expanding nuclear power generation is a cornerstone of China’s plans for reduced reliance on coal. Nuclear capacity is expected to more than double in the coming decade, from 50 gigawatts (GW) in 2021 up to possibly 104 GW by 2031. The expansion rate of China’s nuclear fleet makes it the fastest growing single market in the world for civil nuclear technology and service providers. In 2022, China approved six new reactors — including four at existing sites and two at a new site — a positive indicator for the prospects of future cooperation in this space; however, U.S. Government export restrictions and Chinese efforts to develop an indigenous industry significantly constrain the market opportunity for U.S. companies.
Decarbonization of Heavy Industry: China produces more than half the world’s steel and cement, and these two sectors’ CO2 emissions in China alone currently total more that the total emissions of the entire European Union across all sectors. China’s National Development and Reform Commission will set new efficiency benchmark requirements for certain energy-intensive industries, such as steel, cement, and aluminum, by the end of 2024. Developments in these areas may present additional business opportunities in the near term.
Partner Programs / Market Development Cooperation Program (MDCPs): MDCP grants are financial and technical assistance award programs supporting projects identified as being particularly effective in supporting small- and medium-sized U.S. enterprises. These awards establish partnerships between ITA and non-profit industry groups such as trade associations and standards-developing organizations. Innovative project proposals compete for a limited number of MDCP awards and must demonstrate that they address trade barriers, enhance industry competitiveness, and generate exports that create or sustain U.S. jobs. All U.S. companies can access these programs. The U.S. Department of Commerce currently has two active MDCP partnerships in China to help U.S. companies export to China. The MDCP programming components include market intelligence, trade promotion, and matchmaking with prospective clients. For more information on these programs, visit the Innovation Center for Energy and Transportation (iCET), which focuses on clean tech and decarbonization products and services and the U.S.-China Environmental Education Foundation, which focuses on solid waste management and related technologies.
While quantitative analyses of Chinese market opportunities often highlight the export opportunities of the Chinese market due to its vast size and policy direction, U.S. exporters face stark challenges. Part Four of the U.S. Trade Representative’s 2021 Report to Congress on China’s World Trade Organization Compliance details Key Concerns, including 60 subsections detailing challenges and sector-specific issues. Some standout challenges faced by U.S. exporters include competition against Chinese state-owned enterprises, industrial subsidies and lack of access to those subsidies, excess capacity, forced technology transfer, investment restrictions, administrative licensing, varying standards, unfair competition policy, import bans, trade secrets violations, bad faith trademark registration, and counterfeit goods.
Intellectual Property Rights: The intellectual property rights (IPR) risk for U.S. companies wishing to do business in China is a significant concern, particularly for emerging technologies in the clean energy space. As detailed in ITA’s STOPfakes China IPR Toolkit, developed in coordination with the U.S. Patent and Trade Office, nearly 50% of U.S. technology companies cite a lack of adequate protection for trade secrets as justification for not transferring their technology into China. Similarly, inadequate trade secrets protection limits opportunities for U.S. exporters and potentially impacts China’s ability to reduce emissions by restricting access to advanced U.S. technologies. The STOPfakes Clean Technology Industry Toolkit provides resources for businesses on how to best protect their intellectual property in preparation for exporting.
Homegrown Competition: Increasingly, China’s indigenous companies are becoming global technology leaders able to compete against leading U.S. firms. As such, U.S. companies may struggle to find buyers willing pay U.S. prices dues to cheaper local competition in many sectors. For example, China is the largest market for electric vehicles and new-energy vehicles. Moreover, China is a global leader in refining and processing nearly every material required to produce electric vehicle batteries, creating a supply chain bottleneck and giving Chinese companies a large role in influencing the price and quality of electric vehicles around the world.