Is China capturing the upside from the energy crisis?

Regional disruptions are driving an uneven rise in energy costs, and that’s reshaping industrial competition. Chinese exporters are better positioned than peers in Europe and Southeast Asia to keep production steady — and pick up a global market share — as others slow down, the Financial Times reports.

The advantage is structural: China is a large oil importer from the Gulf, but its broader energysystem dilutes that exposure — domestic coal, a renewables surge, a diversified supplier list, pipelines with neighbors, the EV boom, and strategic reserves are all acting as buffers.

It’s already showing up in output: China’s manufacturing PMI rose to 50.4 in March, returning to expansion after two months of contraction, which indicates that factories are holding up one month into the crisis.

But the real shift is happening in orders: Exporters in eastern China report increasing inquiries from US and European clients who are concerned about supply chain reliability in Southeast Asia. Disruptions linked to the oil shock are hitting countries like Vietnam, Thailand, Cambodia, and Indonesia harder, pushing some buyers to reconsider their “China plus one” strategies.

Reversal matters more than any short-term output data: For years, manufacturers diversified away from China to reduce geopolitical and tariff risk. Now, energy security and delivery reliability are pulling some of that demand back.

Still, this isn’t a clean W: Higher energy costs are feeding into input prices, creating cost-driven inflation in an economy still dealing with weak demand. That means companies are paying more to produce, but can’t easily raise prices — so financial gains get squeezed, even if they can handle it for now.

That creates a split inside the economy: Upstream sectors like energy benefit from higher prices, while downstream manufacturers — especially in consumer-facing industries — see margins tighten.

It’s also a W for gas markets: Chinese firms are reselling record volumes of LNG into spot markets, taking advantage of high prices while domestic demand remains covered by pipeline gas and local supply.