WSJ America Can’t Reshore Everything Dec 31, 2025, A15
by Michael O’Hanlon and Marta Wosinka of Brookings Institution.
https://www.wsj.com/opinion/america-cant-reshore-everything-5565a486?mod=itp_wsj
I looked into this after op ed in today’s Wall Street Journal cited China’s increasingly competitive position in chemicals. I was not aware of China’s major position in petrochemicals and natural gas chemicals. (See Google notes below.) The article seems to refer mostly to small molecules and research. The other areas mentioned depend on positions in specific products.
Chemicals where China leads
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small molecule medications. These are often made in multiple steps in batch reactors. They get synthesized, purified, and moved to the next reaction. This tends to be labor intensive giving China a competitive advantage. People speak of the increasing advantage of China in bio research. This is the labor intensive part where their well trained scientists can excel.
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coatings. Many more products have coatings that people realize. Coatings are usually domestic because shipping solvents (or water) distances is expensive. Also regulations vary from country to country or region to region making nearby manufacture attractive. They probably mean the specialized coatings and photoresists used to manufacture semiconductors. That’s a specialized segment. The latest technology for painting manufactured products is powder coatings. These have no solvent and may be most economical to export. So far no one has learned to make them with inexpensive raw materials. They are the future if cost issues can be resolved.
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sterilization agents. Some of these may be like small molecule medications but the most common one is ethylene oxide. Easily made from ethylene but no cost advantage. Cannot justify shipping costs.
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chlorine/caustic soda. Is made by electrolysis of salt. Largest use is PVC/vinyl. Made from chlorine and ethylene in large efficient plants. Not usually labor intensive. Can be competitive with US plants but hard to justify shipping costs. Low cost electricity gives competitive advantage if from solar/wind/coal. Olin is reporting import competition from epoxy resins which are usually made from bisphenol A and epichlorohydrin, a chlorine chemical.
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pesticides. Some of these are like small molecule medications but some can be used in volumes that justify efficient plants.
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drilling and refining. These are garden variety chemicals not likely to be high value. It tends to be a service industry where company supplies chemicals but also expertise to resolve any problems.
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specialized compounds
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coatings and composites for advanced electronics
Notes from Google on Petrochemicals Natural Gas Chemicals
China has significant natural gas resources and actively produces it from conventional, shale, and coalbed methane sources, but it’s also the world’s largest importer of natural gas (both pipeline and LNG) because domestic production meets only about 60% of its massive and growing demand, making it a major player in both production and consumption,
China has significant oil reserves, both its own proven geological reserves (ranking around 13th-14th globally) and massive, strategically built-up national stockpiles, including strategic petroleum reserves (SPRs) and commercial inventories, which act as a crucial energy buffer, covering substantial days of imports. China continuously expands these reserves, holding over 100 days of import cover in its combined government and commercial stockpiles, providing energy security against supply disruptions.
Key Aspects of China’s Oil Reserves:
Strategic Petroleum Reserve (SPR): A government-controlled system of underground and aboveground facilities built in phases, aiming to provide 90 days of import cover.
Commercial Reserves: Mandated stockpiles held by state-owned enterprises (SOEs) and private firms, adding significantly to total holdings.
Total Stockpile Size: Estimates place combined reserves (SPR + commercial) at over 1.2-1.3 billion barrels, with total storage capacity exceeding 2 billion barrels by late 2024.
Domestic Production: China also produces oil from fields like Daqing and Shengli, but it remains the world's largest net importer, relying heavily on imports.
Purpose: These reserves are vital for energy security, cushioning the impact of geopolitical events or supply chain disruptions, like potential blockades or sanctions.
China is a massive producer of petrochemicals, having become the world’s largest producer of key products like ethylene and polyethylene, significantly expanding its capacity in recent years with new integrated complexes, but this rapid growth is also causing global market oversupply fears and intense domestic competition. China is a leading global player, supplying materials for plastics, fibers, and more, while also driving huge demand for feedstocks like naphtha, even as it pushes for more specialized, high-value chemicals.
Key Aspects of China’s Petrochemical Industry:
Dominant Producer: China now leads globally in ethylene and polyethylene production, surpassing the U.S..
Massive Investment: The country has built numerous large-scale refining and petrochemical complexes, creating huge domestic capacity.
Global Market Impact: This expansion puts downward pressure on prices and leads to increased exports, affecting global markets.
Feedstock Needs: Despite huge production, China still imports significant amounts of petrochemical feedstocks like naphtha and LPG.
Government Focus: China is shifting towards high-value fine chemicals for advanced industries (AI, robotics, etc.) while managing the overcapacity in basic petrochemicals.
Major Players: State-owned giants like Sinopec Group (China Petrochemical) are key players in the sector.
In short, China isn’t just making petrochemicals; it’s dominating the global market and reshaping it through massive production, even as it navigates internal challenges of oversupply and seeks higher-tech chemical production