The report “China’s Hydrogen Sector 2025: Balancing Growth and Challenges”, published by the Sino-German Energy Partnership under the German Federal Ministry for Economic Affairs and Energy, provides an overview of the rapid development of China’s hydrogen sector. The study analyses China’s hydrogen policies, industrial landscape, and technology deployment, while also highlighting key challenges such as the dominance of coal-based hydrogen production, infrastructure development needs, and the transition toward low-carbon hydrogen.
What Europe can learn from China’s hydrogen strategy
China has become the world’s largest hydrogen producer and is rapidly building the industrial ecosystem around hydrogen technologies. The report “China’s Hydrogen Sector 2025: Balancing Growth and Challenges”, developed within the Sino-German Energy Partnership, provides a comprehensive overview of China’s hydrogen industry, including production, infrastructure, policy, technology development and renewable hydrogen deployment.
For engineers, industry professionals and students, the report offers a valuable perspective on how hydrogen can evolve from a niche energy carrier into a large industrial system.
Understanding the scale of China’s hydrogen economy is essential.
Global hydrogen production is about 102 million tonnes per year. China alone produces around 37 million tonnes annually and has production capacity of roughly 50 million tonnes per year. This means China accounts for approximately one third of global hydrogen output.
Most hydrogen in China is still produced from fossil sources:
Electrolysis currently plays only a small role, producing roughly 0.5 million tonnes of hydrogen.
However, China leads globally in electrolysis deployment. Installed electrolysis capacity reached about 3.5 GW by the end of 2024, representing roughly 70% of global capacity. In absolute terms this means:
China therefore installed more electrolysis capacity than all other regions combined.
Renewable hydrogen development is accelerating. Around 94 renewable hydrogen projects are currently operating with a combined capacity of about 1180 MW and potential annual production of around 104,000 tonnes. In addition, dozens of projects are under construction and hundreds more are planned.
China is already the largest hydrogen producer in the world and is rapidly expanding renewable hydrogen and electrolyser manufacturing.
Hydrogen production
China produces around 37 million tonnes of hydrogen per year, roughly one third of global hydrogen output. Global production is about 102 million tonnes annually.
Production capacity
Total hydrogen production capacity in China is about 50 million tonnes per year, making it the largest hydrogen industry worldwide.
Electrolysis capacity
China has installed about 3.5 GW of electrolysis capacity, representing roughly 70% of global installed capacity.
Renewable hydrogen projects
China currently operates 94 renewable hydrogen projects, with a combined electrolysis capacity of about 1180 MW.
Electrolyser manufacturing
Chinese manufacturers account for roughly 60% of global electrolyser manufacturing capacity, producing about 25 GW of electrolysers per year.
Renewable hydrogen potential
Planned projects could eventually produce more than 7 million tonnes of renewable hydrogen annually.
Hydrogen companies
More than 2000 companies are active in China’s hydrogen sector, supported by universities, research institutes and industry associations.
China views hydrogen not only as a climate solution but as a future industrial sector. Hydrogen technologies are embedded in national industrial policy, innovation programs and export strategies. The goal is technological leadership and supply chain control.
China’s hydrogen strategy follows the same pattern seen in solar PV and batteries: rapid industrial scaling leads to significant cost reductions. Electrolysers manufactured in China can cost between about €780 and €1350 per kW installed, significantly below the global average.
Most hydrogen today is fossil-based, but large renewable hydrogen projects are emerging. Hundreds of planned projects could eventually produce more than seven million tonnes of renewable hydrogen per year if fully realised.
China faces a geographic mismatch between production and demand. Renewable energy resources are mainly located in the north and northwest of the country, while industrial demand is concentrated in coastal regions. Currently only about 100 km of hydrogen pipelines exist, although large pipeline networks are being planned.
Local governments play a strong role in hydrogen development. More than 500 hydrogen-related policies have been introduced at the provincial or municipal level, often experimenting with different industrial clusters, subsidies and technology pilots.
The developments in China’s hydrogen sector are not only policy driven — they are shaping the global engineering landscape of hydrogen technologies.
Three aspects are particularly relevant for engineers and technology developers.
Industrial scale and learning curves
China’s rapid scaling of electrolysis systems and hydrogen equipment accelerates technology learning curves. Large deployment volumes enable faster improvements in system efficiency, manufacturing processes and component standardisation.
Cost reduction through manufacturing capacity
Chinese manufacturers are producing electrolysers at significantly lower costs than the current global average. Large manufacturing capacity and supply chain integration could reshape global hydrogen project economics.
System integration at national scale
China is experimenting with integrated hydrogen systems linking renewable electricity, hydrogen production, chemical industries and mobility. These large-scale demonstrations provide valuable insights into how hydrogen can operate as part of a wider energy system.
For engineers working on hydrogen technologies, understanding these developments is important for anticipating future cost structures, supply chains and technology standards.
The report provides a detailed analysis of China’s hydrogen ecosystem, covering the full value chain.
Hydrogen production and applications
The report explains the different production pathways and how hydrogen is currently used, particularly in chemicals, refining and emerging mobility applications.
Hydrogen transport and storage
It analyses current transport solutions such as high-pressure cylinders and the future role of pipeline networks, liquid hydrogen and hydrogen carriers.
Policy and regulatory framework
China’s hydrogen strategy is embedded in the national “Medium- and Long-Term Plan for Hydrogen Energy Industry Development (2021–2035)”, which outlines phased development until 2035.
Industrial ecosystem
More than 2000 companies are already active in China’s hydrogen sector, supported by universities, research institutes and industry associations.
Standardisation
China is developing a comprehensive hydrogen standards system covering production, storage, transport, refuelling and applications, with more than 100 national hydrogen standards already in place.
The report includes several visual resources that help engineers and students better understand China’s hydrogen economy.
Table 1.1 shows the classification of hydrogen types in China, including low-carbon, clean and renewable hydrogen.
Figure 2.1 illustrates hydrogen production methods and sectoral demand across industries.
Figure 4.1 shows renewable hydrogen production capacity in China, including operating, under-construction and planned projects.
Figure 4.2 compares hydrogen production costs across different Chinese regions and production pathways.
These figures provide valuable insights into both the structure and economics of the hydrogen sector.
China’s hydrogen strategy demonstrates how industrial policy, large-scale manufacturing and infrastructure planning can accelerate emerging energy technologies.
For European industry, the key question is not only how hydrogen will support decarbonisation, but also who will lead the technologies and supply chains that define the hydrogen economy.
Understanding China’s approach can therefore help engineers, policymakers and companies better position themselves in the global hydrogen transition.
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