[Korea-China-Japan Hydrogen Supremacy Battle] 2 China Lays the Groundwork with Government Support, Builds Corporate Competitiveness for Global Expansion

Massive Clusters, New Technologies Converge in China's Hydrogen Push
8 Billion Yuan for Five Clusters Over Four Years

China, which has dominated global markets with solar power and batteries, is now developing its hydrogen industry. Its strategy is to build an early-stage market with government support and strengthen companies' ability to stand on their own, aiming to repeat its success in hydrogen.

Zhongdian Gongyuan, a Chinese developer of solid-state hydrogen storage equipment, is also counting on government support. Li Kewen, the company's principal researcher, told this reporter that he expects the hydrogen industry to grow with initial support and eventually reach a stage where it can expand the market on its own.

Citing the battery industry as a precedent, he said, "In Chinese, we say the industry has been weaned off support. After more than 10 years, subsidies for batteries were recently discontinued." He said he expects hydrogen to gain a competitive edge in global markets with government support serving as a stepping stone, as it did for batteries.

To develop its hydrogen industry, China is creating a market that connects production through consumption, centered on large-scale clusters of cities. The central and local governments provide policy and financial support, while state-owned and private companies with the necessary technology expand their businesses.

A key example is the hydrogen-use pilot program for five city clusters approved in October. It is a four-year program to develop hydrogen as a new driver of economic growth under the 15th Five-Year Plan, finalized in March 2026. The program provides 1.6 billion yuan to each cluster, for a total of 8 billion yuan, or approximately 1.6 trillion won.

Notably, the funding is distributed based on performance. Rather than allocating the budget upfront, the government evaluates each city cluster's results and provides funding accordingly. Under this "funding in proportion to results" approach, support is provided in line with the targets achieved.

Li Ke-won, principal researcher at China Zhongdian Gongyuan, is being interviewed by The Asia Business Daily. Photo by Oh Hyun-gil

At the World Hydrogen Expo 2026 on November 5, Zhang Qian, secretary-general of the China Energy Research Society, explained, "Rather than providing the budget upfront, the amount of support is determined by performance. When the central government provides funds to local governments, a reciprocal reward system encourages them to participate voluntarily."

Each city cluster plans and carries out major projects based on its regional and industrial characteristics. A notice jointly issued by China's Ministry of Industry and Information Technology, Ministry of Finance, and National Development and Reform Commission identified four priority areas: developing hydrogen technologies and equipment, industrial hydrogen projects, expanding the use of hydrogen fuel cell vehicles, and building hydrogen refueling stations.

Vehicles are the starting point for expanding hydrogen use. The strategy follows a "1+N+X" structure: hydrogen vehicles and refueling facilities form the core (1); use then expands to carbon-intensive industries such as steel and chemicals (N); and eventually extends to new fields such as shipping, railways, aviation, and power generation (X). The aim is to secure initial demand through hydrogen vehicles, then expand the market across industries and accelerate commercialization.

China plans to have 100,000 hydrogen fuel cell vehicles on the road nationwide by 2030. It has also set a goal of reducing fuel costs alongside expanding the vehicle fleet. Hydrogen currently costs around 40 yuan per kilogram in China, or about 8,000 won. The government plans to lower the price to 20-25 yuan, or about 4,000-5,000 won, by 2030, focusing on the five city clusters.

"The five clusters will each select different pilot projects based on targets for hydrogen prices, holdings, and other factors," Zhang said. "The plan is to build a full value chain covering production, storage, transportation, and use." This means establishing not only hydrogen production facilities, but also storage and transportation systems and actual end-use sites.

Sinopec's green hydrogen demonstration project in Kuqa, Xinjiang. Sinopec is one of China's three major oil companies.

The program spans a broad range of China's major economic regions. According to Xinhua News Agency, it includes the Beijing-Tianjin-Hebei region and the Guangdong-Hong Kong-Macao region. Three other metropolitan clusters will also participate, linking northeastern China, including Inner Mongolia; the Yangtze River Delta; the Xinjiang and Chengdu-Chongqing economic regions; and the Yellow River bend and the Central Plains.

One factor that has enabled China to develop its hydrogen industry across multiple economic regions is a change in hydrogen's legal status. Until 2024, hydrogen was regulated as a "hazardous chemical" in China, meaning that even its industrial use was subject to strict rules on hazardous-material storage facilities and factory locations.

The Energy Law, which took effect in January 2025, formally designated hydrogen as an energy source, paving the way for its broader use across industries. China is accelerating the development of its hydrogen industry by combining this regulatory reform with city-cluster pilot programs and performance-based financial support.

Europe, one of China's major export markets, is also actively pursuing decarbonization policies, adding to the pressure to speed up the transition to hydrogen. China faces the dual challenge of developing hydrogen as a next-generation growth industry while responding to changes in its export markets.

As Chinese companies develop hydrogen technologies and expand the market with policy support, competition with South Korean companies is expected to intensify. South Korean companies competing in a range of fields, from fuel cells to storage and transportation, will need to keep a close watch on the pace of China's industrial development in hydrogen, following solar power and batteries.

This content was produced with the assistance of AI translation services.