Published on May 8, 2014

Since the beginning of economic liberalization in 1978, China has been noted amid the fastest budding economies of the world, relying mainly on investment and export led expansion. In past two decades, the country had experienced an extraordinary growth and the chemical industry has been projected to have profound effects with the changing economic model of the country.

For all the chemicals and polymers the annual growth rate has consistently envisage the constant double-digit and subsequently with the significant rise in the economic crises in the year 2008 had put an end to the credit boom in western countries making the future demand for Chinese exports very uncertain.

Since the economic crises, the government on private consumption is defining a conduit to transitioning the economy from enslavement on investment for growth to reliance, moreover this private consumption relative to GDP is the lowest among major economies. Over the past three decades 10% GDP growth has been traditionally posted by China, nevertheless, in the year 2013 the GDP growth was posted 7.4% and was noted as the slowest year on year growth.

In the past few decades, the fast demand growth in the face of economic slowdown had encouraged a wave of investments which led to an overcapacity where chemical industry were not spared with overcapacity in commodities such as Methanol and Polyvinyl Chloride however gloomy profitability were also noted in few sectors like vitamins. On the other hand, chemical industries are entering into the phase of more discerning growth and consolidation.

Through the year 2020, extensive volumes of petrochemical imports are estimated to be obligatory consequently China will still prolong to import commodity chemicals, predominantly in the areas it lacks feedstock. According to the World Bank, by the end of this year, China is set to become the largest economy of the world at 7% growth. Hence, changing deteriorating growth model by China is noted as one of the biggest risk for the world as well as for the chemical industry.