China's Agrochemical Industry: 2026 Supply Outlook and Strategic Shifts
China's agrochemical industry is undergoing a significant transformation, driven by new policies, intense competition, and a shift towards high-efficiency production. The 15th Five-Year Plan will guide this evolution, with a focus on R&D, advanced manufacturing, and boosting domestic consumption by phasing out export VAT refunds. While generic products gain global market share, caution in new capacity investment is expected. Future strategies include branded formulation exports, patented compound development, and biological product innovation, aiming for sustainable profitability and global competitiveness beyond 2026.
China's agrochemical industry is at a pivotal juncture, reshaping global pesticide supply through 2026 and beyond. Driven by national strategies, particularly the upcoming 15th Five-Year Plan, the sector is transitioning from mere production capacity expansion to high-efficiency manufacturing, incorporating advanced equipment, AI, and digital control. A key policy shift is the move to boost domestic consumption over exports, exemplified by the abolition of export VAT refunds for certain phosphorus chemical products from April 1, 2026, a policy likely to expand. This aims to regulate nonrenewable resources and address insufficient domestic demand.Market dynamics show intensified competition, with Chinese generic pesticide products rapidly gaining global market share due to cost-effectiveness, despite lingering low prices. However, the industry faces overcapacity challenges from aggressive pre-2023 investments, leading to more prudent future capacity investments and new regulatory monitoring mechanisms.Internationalization strategies are evolving; offshoring production is less favored, replaced by overseas expansion of branded formulation products, which have surpassed technical materials in export volume since 2023. Increased R&D in patented compounds from leading Chinese enterprises like Jiangshan and KingAgroot is also a priority, alongside the development of diverse biological products, particularly for cash crops. While short-term price stability is projected for 2026, RMB appreciation and geopolitical factors suggest an upward trend in USD-denominated prices. China's full-industry-chain advantages, low-cost raw materials, and strong carbon reduction goals will continue to bolster its global supply chain competitiveness.
