Maguire: New models are needed to track China’s chaotic commodity transition.

China is the world's largest energy consumer and the most energy-intensive country, but analysts who monitor the country's raw materials needs may have to adjust their models in order to take into account key structural changes to its economy.

Years of weakness in the property sector, historically the main driver for economic growth, has forced the country to re-calibrate how it generates demand and creates jobs.

This has led to a contraction of activity in the property sector.

These?developments? have changed China's economy in a material way. The energy and commodity intensity of China's inputs has also been altered, as well as the steady expansion of high-end manufacturing.

With U.S. president Donald Trump's trip to Beijing for a meeting with Xi Jinping this week, the backdrop has changed. Any extension of last year’s trade truce – including commitments on exports of rare earths – would ease one of most acute pressure points of global commodities markets.

This article will explain how China's economic transformation has occurred in the last few years, and how commodity analysts should update their models so that they can track the future health and trajectory for the world's biggest trade partner.

SURGE IN SERVICES

China's massive secondary sector, which includes the extraction and?refining raw materials as well as construction, has been key in the country's rise to become the world's top commodities consumer.

From the mid-1970s to 2009, it was the main engine of economic expansion.

Since 2010, however, the services sector, which includes retail, insurance, and tourism, has surpassed the secondary sector in terms of being the largest employer and economic driver.

This shift has been accelerated by the real-estate crisis and a construction industry that is almost frozen.

The overall investment in real-estate has been declining steadily since 2022, following the accumulation of debt by key property developers. This resulted in a contraction in housing and construction that was unprecedented.

Construction materials have been hit hard by the fallout of the real estate crisis. Steel, cement, ceramics, glass and household pipes are all at multi-year lows.

China's consumption has been hit by a decline in thermal coal, gas, and other industrial feedstocks that are used for construction materials. This is sending a bearish signal to global base material markets.

Analysts are hampered by the sharp increase in China's exports this year of cement and clinker. These two ingredients are essential for concrete production.

China Customs data shows that both the volume and the value of China cement shipments has risen to its highest level in over a decade, so far, in 2026. This is a lifeline for producers, even though domestic demand is still sluggish.

These same exports, however, could undermine the profitability of other producers due to the size of China's sector of cement. This may lead to a reduction in production in other countries.

High-Quality Growth

China's construction material and property developers have suffered, but other important parts of the industrial landscape have grown steadily in recent years. This has helped to cushion the economy against a more severe slowdown.

China's production of electric vehicles, renewable energies, batteries, and other technology components have risen to record highs, both in high-end manufacturing as well as retail.

These segments are essential for commodity analysts who want to track China's economy.

China's battery and EV industries have reshaped global commodity flows, such as lithium, graphite and nickel. China is also the world's largest consumer of rare earths.

It is also important to track China's exports for EVs, battery systems and renewable energy systems. The expanding reach of China’s producers will impact demand profiles in a number of raw material markets.

Chinese companies account for the majority of exports from EVs, Batteries and Renewable Energy Systems to Europe, Africa and Latin America.

The record-large shipment of low-priced parts is raising tensions between rival producers, particularly in Europe.

China continues to expand its market share, and is now the largest supplier of clean energy technologies in the world.

Analysts are also becoming more complex as the spread of Chinese components has displaced demand for raw materials required to manufacture these same products in countries that import them.

Customs data show that China's manufacturing power extends also to nuclear reactors, their components, and exports of Chinese made components have also reached record highs in 2026.

China's nuclear industry, which was previously a small player in the world market, has now expanded into a new area.

Beijing's vision for the future is centered on manufacturing growth in clean energy. This should allow both domestic production and exports to expand.

Analysts are expected to keep up with China's rapid and directional change. It is not an option.

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(source: Reuters)