China is building the hydrogen economy of the future

The Middle Kingdom aims to become the centre of the global hydrogen economy. (AI-generated)

China is building the hydrogen economy of the future

Whilst Europe debates funding gaps and the political framework, and the roll-out of hydrogen is falling short of expectations, it is gathering pace in China. Under its 15th Five-Year Plan, the country has designated hydrogen as a national technology of the future, alongside nuclear fusion, ammonia and methanol. China already dominates production figures and is putting pressure on Western manufacturers with its low costs. The following article assesses how far China’s hydrogen roll-out has progressed, what goals the country is pursuing, and what impact these might have on the rest of the hydrogen sector.

In Germany and Europe, the hydrogen hype has noticeably lost momentum: the Energy Transition Monitoring Report considers the target of 10 GW of electrolysis capacity by 2030 to be unrealistic, and the Federal Audit Office has criticised the inefficiency of the domestic hydrogen roll-out. Even the European Hydrogen Bank, once hailed as a beacon of hope for funding, is seeing an increasing number of projects being scaled back: several project developers now prefer to pay contractual penalties rather than actually implementing their projects. Against this backdrop, the pace set by China stands out all the more clearly.

Future technology by party resolution

The process began with the 4th Plenary Session of the 20th Central Committee of the Communist Party, which met in Beijing from 20 to 23 October 2025. There, China’s leadership classified hydrogen as a key technology for the future for the first time. In March 2026, the National People’s Congress confirmed this approach in the final 15th Five-Year Plan: Hydrogen, ammonia and methanol are now listed there, alongside nuclear fusion, as future growth sectors, the expansion of which Beijing intends to drive forward over the next five years through targeted programmes.

The fact that China has included hydrogen in the Five-Year Plan means, above all, that hydrogen is evolving from a niche technology into a state-prioritised industrial and infrastructure initiative. This signals funding, regulation, networks, standards and the development of supply chains.

The implications of this have been clearly demonstrated in recent years in the fields of photovoltaics and battery technology. China has followed a similar path in these sectors. And the photovoltaic industry in particular is a prime example of how a five-year plan can catapult an industry to the forefront on a global scale.

Plenary session of the Central Committee of the Communist Party of China in the Great Hall of the People in Beijing (© Mirko - stock.adobe.com)

Leading nation in production, patents and infrastructure

China is the world’s largest producer and consumer of hydrogen. The National Energy Administration (NEA) has estimated that both figures will total around 36.5 million tonnes by 2024. The vast majority of this comes from conventional production, such as from coal or as an industrial by-product. Green hydrogen produced by electrolysis has so far played only a minor role in China as well. Of the approximately 600 renewable hydrogen projects planned nationwide, around 100 are currently operational. These have an annual capacity of around 220,000 tonnes.

China also leads the way in infrastructure: by the end of 2024, the country had over 560 hydrogen refuelling stations and more than 25,000 fuel-cell commercial vehicles. According to the state-run media outlet China Daily, by the end of 2025 China also held around 100,000 hydrogen patents – more than any other country.

A pragmatic mix of technologies rather than dogma

Unlike the European debate, which draws a strict distinction between green, blue and grey hydrogen, China is opting for a technology-neutral mix of renewable energies, hydropower and coal gasification. The share of green hydrogen is set to grow gradually by 2030, without jeopardising ongoing industrial operations. This approach enables early economies of scale in the manufacture of electrolysers:

According to the International Energy Agency (IEA), the manufacturing costs of Chinese electrolysers in 2024 ranged between 600 and 1,200 US dollars per kilowatt. By comparison, international costs ranged between 2,000 and 2,600 US dollars.

According to the IEA’s Global Hydrogen Review 2025, China accounts for around 65 per cent of the world’s installed electrolysis capacity and just under 60 per cent of global manufacturing capacity.

In alkaline electrolysis, China’s dominant technology, domestic manufacturers control an estimated 85 per cent of global production capacity.

China is a leader in the manufacture of alkaline electrolysers and is expanding rapidly into the PEM sector (©Hygreen Energy)

Specific targets by 2030

The five-year plan is backed up by figures: installed electrolysis capacity in China is set to rise to around 100 GW by 2030, enabling the production of around one million tonnes of green hydrogen per year. The number of fuel cell vehicles is set to grow from just under 30,000 by the end of 2025 to around 100,000. As for end-user prices, Beijing is aiming for a price of under 25 yuan per kilogramme, and in leading regions as low as around 15 yuan. That equates to between 1.90 and 3.20 euros. By way of comparison: green hydrogen currently costs between 10 and 20 euros per kilogramme in Europe, depending on the supply model. If China achieves its target, this energy source would be similarly affordable to natural gas.

Export push into Europe

The cost advantages are also set to have an international impact. The electrolyser manufacturer Sungrow Hydrogen opened a research and development centre at Munich Airport in August 2025. Shortly before that, the company, together with the EPC group Wison Engineering, unveiled the containerised ‘MegaFlex’ concept, an electrolysis plant scalable up to the gigawatt range. At the same time, Sungrow has a stake in the Songyuan Hydrogen Energy Industrial Park, one of the world’s largest hydrogen projects with an investment volume of over four billion US dollars.

A critical perspective

The ramp-up is not without conflicting objectives. The use of coal gasification for hydrogen production is at odds with the decarbonisation target.

Furthermore, in its Global Hydrogen Review 2025, the IEA warns of market displacement: manufacturers outside China are coming under increasing pressure from low prices, and the first instances of insolvency and consolidation are already becoming apparent. This pattern is already familiar from solar panels, batteries and electric vehicles.

To counter this, the ‘European Resilience Alliance for Clean Hydrogen & Derivatives’ was founded in April 2026 – an alliance of European energy companies and the Hydrogen Europe association, which warns against Chinese dominance of the hydrogen supply chain. Since January 2026, the EU has also been imposing a charge on the CO₂ emissions of imported hydrogen.

The launch of the “European Resilience Alliance for Clean Hydrogen & Derivatives” at the European Parliament (©Hydrogen Europe)

Outlook: The race for economies of scale

For Europe, the same question arises as it did previously with solar modules and battery cells: whether to build up and protect its own manufacturing capacities or to use low-cost Chinese technology, with the risk of new import dependencies. The industry faces a tight window of opportunity: those who do not invest now in manufacturing, securing demand and infrastructure run the risk of once again ceding the crucial economies of scale to China.