Published on June 28, 2014

The chemical industry of China is heading toward a phase of self-sufficiency and sustainability. The Five year plans play a vital role in paving the path for the industry. The 12th Five Year Plan has listed 7 emerging sector, 4 of which belong to the chemical industry. The emphasis on energy conservation, new energy, new materials etc has pushed chemical firms to strengthen hold in higher grade chemical segments.

Earlier chemical companies were involved with the bulk chemicals sector and only a few international firms dominated the high-end chemical and specialty segments.
However, a phase of change has witnessed increasing number of companies expanding their chemical portfolio and seeking new world markets.

The government is  focused on improving China's self-sufficiency in chemicals. Local manufacturers are expected to improve their value chains. Self-sufficiency can be developed by encouraging growth of sectors like specialty and fine chemicals.

A number of sectors, which are net importers, have set a target of 80 per cent self-sufficiency by 2015. The fine chemical segment is also undertaking product innovation. The value of China's fine chemical production is likely to reach RMB 1.6 trillion by 2015. China is one of the largest producers of chemicals and will suffer a shortage between chemical demand and supply. The deficit between demand for chemicals used in plastics outpaces local capacity, a deficit which is expected to remain until 2020.

Chinese chemical companies will have to face the challenge and bring about upgrades and reforms. Improved access to Western technology and processes can do wonders for the industry.
The government is also looking to balance the geographic spread of its industries by shifting economic activities to central and western China, a process accelerated by the chemical and petrochemical industries.

The East continues to be the hub of industrial activity, but growth in central and western China has improved significantly.