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

China is the most energy-intensive country in the world and the top consumer of power. But analysts who monitor the raw material requirements for the country may need to adjust their models to take into account key structural changes to its economic makeup.

Years of weakness in the real estate sector, historically the primary driver of economic expansion, 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 significantly altered China's energy and commodity intensity, as well as its output mix.

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 industry - which includes the extraction, refining and construction of raw materials - 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, the services sector, which includes retail, insurance, and tourism, has overtaken secondary sectors as the largest employer and economic engine.

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 the year 2022, due to a rise in debt amongst key property developers. This led to a contraction of unprecedented proportions in both the construction and housing sectors.

Construction materials have been hit hard by the fallout of the real estate crash. Steel, cement, ceramics, glass and glass piping, as well as the production of glass, porcelain, ceramics, and steel has fallen to multi-year lows.

China's consumption has been hit by a decline in thermal coal and natural gas, as well as other industrial feedstocks that are used to make construction materials. This is sending bearish signals throughout the global base material markets.

Analysts are tripped up by the sharp increase in China's cement and clinker exports this year, which are key ingredients in the production of concrete.

China Customs data shows that both the volume and value have increased to their highest levels in over a decade, so far, in 2026. This is a lifeline for producers, even though domestic demand remains stagnant.

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.

Since 2022, China's production of electric vehicles, batteries, renewable energy, and other technology components have reached record highs, boosting both high-end manufacturing, and retail.

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

China's battery and EV industries have radically changed global commodity flows, such as lithium, nickel, cobalt, and rare earths. China is now the world's largest consumer of these commodities.

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

Chinese companies account for the vast majority of EVs, Batteries and?renewable energies systems exported to Europe, Africa and Latin America.

The record-high shipments of low-priced parts are causing 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.

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 and international expansion.

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

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(source: Reuters)