Analysis of China's new chemical materials industry chain in 2025

The new chemical materials industry serves as a crucial material foundation supporting modern industry, particularly the development of strategic emerging industries. Its industrial chain encompasses upstream basic raw materials and monomers, midstream manufacturing of new chemical materials, and downstream applications across a wide range of sectors.The rise of the new energy industry — especially the rapid growth of new energy vehicles, lithium batteries, photovoltaics, and wind power — has generated strong demand for new chemical materials, driving rapid expansion in sub-sectors such as lithium battery materials and degradable materials.

Although China’s new chemical materials industry has made significant progress in self-sufficiency and core technologies, it still faces challenges in high-end products, key technologies, and industrial chain coordination. At the same time, it is confronted with tremendous opportunities for domestic substitution and industrial upgrading.National and local governments have introduced a series of supportive policies and actively promoted the development of industrial clusters, providing strong guarantees for the sustained and healthy growth of the industry.

I. Definition and Classification of the New Chemical Materials Industry

New chemical materials refer to newly developed or emerging chemical materials that possess superior properties or specific functions absent in traditional materials. These materials are typically characterized by high performance, high added value, and high technological barriers, serving as vital cornerstones for modern and high-tech industries. They are widely applied in various sectors of the national economy and defense construction.

According to China’s current industrial classification, new chemical materials primarily cover five major categories:

① High-performance resins：Including engineering plastics, high-end polyolefin plastics, polyurethane materials, fluorosilicone resins, and other high-performance polymers.

② Special synthetic rubber

③ High-performance fibers

④ Functional membrane materials

⑤ Electronic chemicals：Including lithium battery materials, semiconductor materials, and advanced display materials.

These classifications reflect the diversity and complexity of the new chemical materials industry, as well as its importance in meeting specialized requirements across different industrial fields.
In strategic industries such as aerospace, electronic information, new energy, and high-end equipment manufacturing, new chemical materials play an indispensable role.

II. Panoramic Analysis of the New Chemical Materials Industry

1. Upstream of the Industrial Chain: Basic Raw Materials and Monomers

The upstream segment of the industry mainly includes basic raw materials, various chemical additives, and monomer intermediates.
Basic raw materials are the starting point of chemical production and mainly consist of fossil resources such as crude oil, coal, and natural gas. Through refining and cracking, these resources are converted into key chemical intermediates such as ethylene, propylene, p-xylene (PX), and caprolactam (CPL) — the cornerstones for producing polymers and fine chemicals.

① Ethylene → used to produce polyethylene, polyvinyl chloride, and ethylene oxide.

② Propylene → used to produce polypropylene, acrylonitrile, and epichlorohydrin.

③ Paraxylene (PX) → key raw material for purified terephthalic acid (PTA), which is used to make polyester (PET).

④ Caprolactam (CPL) → monomer for nylon 6 production.

In addition, the upstream segment includes chemical additives such as catalysts, solvents, stabilizers, and flame retardants, which play crucial roles in improving synthesis efficiency and enhancing material performance.

Monomer intermediates — compounds derived from basic chemicals through further reactions — are the direct feedstocks for synthesizing polymer materials.

The stability, price fluctuations, and quality of upstream raw materials directly affect midstream production costs and product quality. This sector is relatively concentrated, dominated by major energy and chemical enterprises such as CNPC and Sinopec.

2. Midstream of the Industrial Chain: Manufacturing of New Chemical Materials

The midstream segment is the core of the industry chain, where upstream raw materials and monomers are transformed into new materials with specific properties through chemical synthesis, polymerization, and modification processes.

Midstream manufacturing can be classified into three categories:

① New high-end chemical products developed for emerging market demands with high technological content and added value.

② Upgraded traditional materials, where performance is enhanced through process innovation and technological improvement.

③ Secondary processed materials, including high-end coatings, adhesives, and functional films, often produced via modification or compositing.

This segment encompasses a broad range of materials, including:

• Engineering plastics

• High-end polyolefin plastics

• Polyurethane materials

• Fluorosilicone resins

• Special synthetic rubber

• High-performance fibers

• Functional membrane materials

• Electronic chemicals (e.g., lithium battery materials, semiconductor materials, display materials)

• Nano chemical materials

• Special coatings and adhesives

• Special additives

The technological level, production scale, quality, and R&D capability are key indicators of competitiveness.
Currently, China demonstrates strong capacity in mid- to low-end materials but remains dependent on imports for certain high-end products and technologies.

The competitive landscape includes:

• First-tier: International giants (e.g., BASF, Covestro) and leading domestic companies (Wanhua Chemical, Huafeng Chemical, Kingfa Technology).

• Second-tier: State-owned and top private enterprises (Juhua Group, Zhejiang NHU).

• Third-tier: Numerous small and medium-sized private firms.

Regionally, production is concentrated in coastal provinces such as Shandong, Guangdong, Jiangsu, and Zhejiang.

3. Downstream of the Industrial Chain: Application Fields and Market Demand

The downstream segment represents the application markets of new chemical materials. With their superior properties and special functions, these materials are essential in numerous high-tech and emerging sectors.Market demand is the main driving force behind the development of new materials, with different industries requiring distinct material characteristics.

Major Application Areas

Electronic Information Industry:
Semiconductor manufacturing relies on electronic chemicals such as photoresists, high-purity reagents, specialty gases, and polishing materials.
Printed circuit boards (PCBs) require special resins (epoxy, polyimide), copper foils, and inks.
Advanced displays (LCD, OLED, Mini/Micro LED) use liquid crystal materials, optical films, and conductive films.
The rollout of 5G has also boosted demand for high-frequency substrates, antenna materials, and thermal management materials.

Automotive Industry:
Lightweight, energy-efficient, and intelligent vehicles require high-performance engineering plastics (PA, PC, PBT, PPO) and specialty plastics (PEEK, PI).
Special rubbers (EPDM, silicone, fluororubber) and thermoplastic elastomers (TPE, TPV) are used for seals, hoses, and tires.
Electric vehicles require insulation, flame-retardant, and lightweight materials for batteries and motors.

Medical and Healthcare Sector:
High-purity polymers, biocompatible materials, and antimicrobial films are essential for devices, implants, and medical packaging.

Aerospace Industry:
Requires materials with lightweight, high strength, temperature resistance, corrosion resistance, and radiation resistance.
Carbon fiber composites, aramid fibers, silicone sealants, and high-performance adhesives are key components.

Rail Transit:
High-speed trains and metro systems use engineering plastics, composites, and rubbers with excellent flame retardancy, fatigue resistance, and durability.

Energy and Environmental Protection:
Membrane materials, adsorbents, catalysts, and biodegradable plastics play major roles in water treatment, emission reduction, and sustainable development.

Construction and Packaging:
High-performance waterproofing, insulation, and fireproof materials enhance building sustainability.
Biodegradable and high-barrier films are expanding rapidly in packaging and daily-use products.

III. Opportunities and Challenges in Domestic Substitution

Despite challenges in high-end products and technologies, China’s new chemical materials industry is entering a phase of accelerated localization and import substitution.

1. Market Opportunities

China’s massive domestic demand — driven by the expansion of industries such as electronics, new energy, high-end equipment, and biomedicine — offers fertile ground for domestic enterprises.In areas like high-end polyolefins, specialty engineering plastics, high-performance fibers, and semiconductor materials, domestic self-sufficiency remains low, creating substantial substitution potential.

2. Policy Support

Government initiatives such as the “Guidelines for the First Batch of Demonstration Applications of Key New Materials” and the “Guidelines for the Development of the New Materials Industry” provide financial incentives, R&D support, tax relief, and market promotion for new materials.These policies reduce innovation risks, encourage R&D, and stimulate industrial application.

3. Industrial Transformation and Supply Chain Localization

As Chinese manufacturing upgrades toward high-end, intelligent, and green development, downstream industries demand higher performance and more secure supply chains.Geopolitical uncertainties have prompted many companies to prioritize local suppliers, fostering joint R&D and accelerating localization.

4. Emerging Competitive Strengths

Chinese companies have already achieved international competitiveness in several sectors, such as lithium battery materials, photovoltaic EVA films, engineering plastics, and specialty rubbers.Their technological advancements and cost advantages provide a strong foundation for broader domestic substitution.

5. Challenges Ahead

To fully capture these opportunities, domestic enterprises must continue to enhance:

① Technological innovation and fundamental research

② Product quality and stability

③ Brand reputation and international certification

④ Industrial collaboration and standard-setting

Only through these efforts can China achieve the transformation from “Made in China” to “Created in China” and secure a leading position in the global chemical new materials market.