China is the world’s largest producer and consumer of industrial goods, but it remains under-represented in international initiatives driving industrial decarbonisation. China has made major progress at home, but its limited international engagement risks undermining its own competitiveness while weakening the impact of global initiatives. With clear mutual interests in finance, innovation, and standards, deeper cooperation could strengthen China’s competitiveness and boost progress worldwide.
Heavy industries like steel, cement, and chemicals account for around 20% of global greenhouse gas emissions. Decarbonising these sectors is essential for achieving global climate goals, but progress has been slow. In recent years, a wave of international initiatives has emerged to drive cooperation, investment, and standards for low-emission industrial production.
China has significant potential to influence global industrial decarbonisation
As the world’s largest producer and consumer of industrial goods, China has a pivotal role to play in these efforts. International initiatives are already shaping markets that Chinese exporters depend on: for example, 45% of China’s steel exports and 50% of its aluminium exports go to Climate Club members, many of whom are committed to common standards and low-carbon procurement criteria. Without closer engagement, Chinese firms risk losing competitiveness as these rules become global norms.
At the same time, China has made significant domestic progress. It has introduced new standards for green steel, expanded its emissions trading system to industrial sectors, and become a global leader in hydrogen and carbon capture technologies. These advances put China in a strong position to help shape global rules and share lessons with other countries.
However, China remains formally under-represented in most international forums on industrial decarbonisation (despite progress in private-sector engagement), limiting its ability to influence emerging frameworks and leaving a gap in global governance.
China’s limited involvement reflects geopolitical tensions, the complex initiative landscape, and concerns around overcapacity, which have made it harder for Chinese stakeholders to engage with certain initiatives. Cultural and political differences also play a role, such as the preference among Chinese stakeholders to under-promise and over-deliver, in contrast to some initiatives struggling to deliver on commitments. A lack of communication between parties has also created distrust and poor understanding of mutual interests and activities.
Identifying common priorities can pave the way to deeper cooperation
In our report, we identify three areas where Chinese and international priorities overlap most strongly: finance and investment, research and innovation, and standards and certification. Deeper cooperation in these areas could unlock mutual benefits, building trust and accelerating progress on the global industrial transition.
China also has the potential to lead beyond the existing frameworks. By convening a new South–South industrial decarbonisation partnerships, China could bring together emerging economies to pursue low-emissions industrial pathways, harmonise standards, and co-finance clean manufacturing hubs. This would not only support global climate goals, but demonstrate China’s leadership in shaping the next phase of sustainable industrial development.
For China, the challenge will be positive strategic engagement with existing initiatives, and transparency around domestic action. For international initiatives and G7 governments, the key challenge will be to open structured channels for Chinese participation and to ensure that industrial cooperation is based on reciprocity and mutual benefit, rather than conditionality. With such an approach, global efforts to decarbonise heavy industry can achieve greater scale, credibility and impact.
Recommendations
For strengthened Chinese engagement with international initiatives
1. Prioritise strategic engagement in existing international initiatives, especially where policy aims overlap.
China should initiate engagement with select forums where policy alignment already exists – notably with the Climate Club, the Industrial Deep Decarbonisation Initiative (IDDI), and the Leadership Group for Industry Transition (LeadIT).
2. Enhance the transparency and global compatibility of domestic green standards.
China should accelerate alignment between the green product standards currently under development domestically and global frameworks to facilitate mutual recognition.
For China in a leadership role
3. China could initiate a new “South–South Industrial Decarbonisation Partnership”.
China could convene a platform of Global South countries focused on low-emissions industrialisation pathways, including joint standards, joint procurement, and co-financed clean manufacturing hubs.
For G7 and international initiative host governments
4. Open key initiatives to structured Chinese participation, especially where policy aims overlap.
The Climate Club, IDDI, Breakthrough Agenda and other key initiatives should publicly invite China to participate in specific workstreams with clear ground rules.
5. Make industrial cooperation politically reciprocal.
When engaging with China on climate and industrial partnerships, G7 countries and those leading international initiatives should work on a basis of mutual reform and co-benefit, not conditionality – making policy suggestions that are co-owned, not externally imposed.
