The aluminium market has become one of the key areas of global economic and climate competition. For several years, we have been observing the growing dominance of China, which is not only the result of production advantages, but above all the result of intensive state support. Government subsidies for the Chinese aluminium industry distort fair competition on international markets and pose a serious threat to both European and Polish producers. The CBAM (Carbon Border Adjustment Mechanism) is the European Union's response to these challenges.
Chinese Subsidies – Facts and Figures
According to the report OECD "Measuring distortions in international markets: the aluminum value chain" (OECD, 2019), as much as 85% of the $70 billion in global subsidies for the aluminum sector between 2013 and 2017 went to just five Chinese companies. The subsidies include preferential loans from state-owned banks, direct grants, tax breaks, and access to electricity and land at non-market prices.
As a result, China's primary aluminium production has increased from 11% of the global share in 2000 to around 60% in 2025. On average, 4% of Chinese aluminium companies' revenues still come from subsidies, which significantly distorts market mechanisms.
And now some key facts and figures:
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In the years 2013–2017 as many as 85% of global subsidies in the aluminum industry went to 5 Chinese companies.
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China increased its share of global aluminum production from 11% in 2000 to 60% in 2025
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The number of primary steel mills in the US decreased from 23 (2000) to 4 (2025).
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Chinese subsidies include:
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Preferential loans
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Direct subsidies
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Tax reliefs
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Access to energy and land below market value
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Consequences for the European and Polish aluminum industry
Subsidized imports of cheap aluminium from China have led to significant deindustrialisation of the sector in Europe. According to the publication Joint Research Center (JRC) from 2024:
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W in 2002 The EU had 23 active primary aluminium smelters.
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Do in 2022 their number dropped to 11 (source: https://publications.jrc.ec.europa.eu/repository/handle/JRC136525).
The data therefore confirms almost double the decrease active steel plants over two decades.
In Poland, existing installations struggle with high energy costs, regulatory inflation and competition from products from countries with lower environmental standards.
In addition, Chinese aluminum is produced mainly from coal, which makes its carbon footprint 2-3 times higher than the average for European producers (International Aluminum Institute, 2024). Importing such products undermines the effectiveness of EU climate policy.
CBAM as a protective and climate mechanism
CBAM, or the Border Adjustment Mechanism for CO2 emissions, was introduced as part of the Fit for 55 package. Its main goal is to prevent carbon leakage by taxing imports from countries that do not have environmental standards comparable to those of the EU.
Advantages of CBAM:
- Leveling the playing field for European producers.
- Promoting the decarbonisation of supply chains.
- Limiting imports of high-emission products.
- Increasing ecological awareness in trade relations.
CBAM Challenges:
- The complexity of reporting emissions data.
- Lack of consistency in data provided by non-EU manufacturers.
- Risk of trade retaliation from China and other countries.
- The need to cooperate with partners outside the EU to ensure transparency.
Polish perspective: what next?
Polish aluminium producers can benefit from CBAM, but only if they actively manage their carbon footprint and comply with reporting requirements. Key investments will include:
- low emission technologies,
- digital tools for managing emission data (e.g. Reporting Assistant),
- education of foreign suppliers regarding embedded emissions.
Additionally, a rarely mentioned aspect of CBAM is its negotiating potential: it can be a bargaining chip in trade talks with third countries on raising environmental standards.
Therefore, one can argue that China can produce aluminum cheaper thanks to subsidies, but often with a high carbon footprint – CBAM can correct this by making imports less profitableif it does not meet environmental standards.
Summary
Chinese subsidies are quite significantly disrupting the functioning of the global aluminum market and have threatened European producers. CBAM is not only a climate response, but also an industrial and strategic one. However, implementing this mechanism requires an active approach from the industry and international cooperation. For Polish companies, aluminum is a chance to regain a competitive position based on low emissions, innovation and compliance with ESG regulations.
