The petrochemical and chemical industries with their high degree of industrial cross-linking and connections, has an important position in China’s industrial-economic system. These branches are an important sign of national economic-social development level and comprehensive strength.
By Pan Aihua
Currently, China has already become a great producer and important customer for petrochemicals, however, the industry still has an outstanding issue: It is considered “Large, but Not-Strong”, as scientific and technological innovation ability is insufficient and lacking behind its global competition. Further, as there is still the space in deep integration of “informatization” and industrialization, full implementation of green manufacturing is imperative.
These factors should set the recent Made-in-China 2025 planning outline high on the agenda of China’s petrochemical and chemical industry: It includes accelerating the industry innovation development and green development, improving quality and increase efficiency, accelerating the steps of industry transformation and upgrading, realize the transformation from petrochemical and chemical great industry country to powerful industry nation.
Made-in-China 2025 Indicates the Direction for Petrochemical and Chemical Industry
Through over 60 years’ development since the Founding of New China, especially over the past 30 years of Reform and Opening-up, the overall technical level of China’s petrochemical and chemical industry has been constantly upgrading, and the scale of the country’s industry has been continuously enlarging – China has become a global powerhouse for both petrochemical and chemical industries alike.
All these above have laid a solid foundation for China to become a petrochemical and chemical industry powerful nation.
For the first time, China’s industrial scale stands front-rank in the world. In 2014, the income from China’s petrochemical and chemical industry is RMB 14.06 trillion Yuan.
Secondly, the level of intensity is constantly upgraded.
Thirdly, Raw materials and product structure are undergoing constant optimization. Overall self-sufficiency ratio of new chemical materials is increased to about 60%.
Fourthly, energy conservation and emission reduction are showing effects.
Fifthly, science and technology innovation ability is constantly upgraded.
Sixthly, the integration of informatization and industrialization has achieved remarkable effects.
Although these are outstanding achievements, the task of empowering the national petrochemical and chemical industry still arduous. Compared with other world powers, China’s petrochemical and chemical industry still has a large outstanding “Large, but Not-Strong” issue. It is mainly displayed in the following aspects: Production capacity of basic products is excess, self-sufficiency ratio of high value-added products is low.
Industry concentration is on the low side, homogeneous competition is outstanding; Development mode is relatively extensive, quality and benefit remains to be improved. Independent innovation ability is not strong, as is the lack of industry leading core technologies.
Informatization level is low, deep integration of IT and industrialization has still deficiencies. Energy conservation, environmental protection and safety management level remains to be improved. Innovation driven, quality first, green development, structural optimization and talent-oriented” is the fundamental policy put forward by Made-in-China 2025, it are also the general requirements for development of Made-in-China. The fundamental policy also indicates the direction for development of petrochemical and chemical industry.
How Made-in-China 2025 Brings new Opportunities for Industry Development
Currently, the development of the petrochemical and chemical industry faces with new situations and new problems:
- At first, the slow global economic recovery and the slow domestic economic growth have shrunken the demands for petrochemical products, besides economic downturn pressure is still lasting.
- Secondly, structural overcapacity contradictions of China’s petrochemical industry are prominent, as the traditional industry enters the low profit era, therefore it is pretty arduous for industrial transformation, upgrading and structural adjustment.
- Third, the restriction of resources and environment has reached an upper limit, energy conservation and emission reduction, green development presents the rigid constraint, traditional development modes are facing the severe challenge.
- Fourthly, international and domestic competition tends to be fiercer, technological innovation becomes the biggest variable of industry and enterprise development.
Uncompetitive enterprises, which have increasing survival stress, may face the shuffle of new round. The implementation of Made-in-China 2025 will bring new opportunity to petrochemical and chemical industry development. It is mainly displayed in the following aspects:
- While intelligent manufacturing helps the chemical industry transformation and upgrading, Made-in-China 2025 proposes to advance the manufacturing process intellectualization. To make experiments in building intelligent plant/digital workshop in the key fields; accelerate the application of man-machine intelligent interaction, industrial robotization, intelligent logistics management and other technologies and equipments in the production process. Chemical industry, which is a typical process industry with long industry chain and various control points as well as complicated technological process, is the technology-intensive industry. It strongly depends on equipments and instruments. Whether the equipment is sophisticated or not represents advanced level of industry. Made-in-China 2025 adopts promotion of intelligent manufacturing as main attack direction; once chemical equipments obtain qualitative intelligent leap, it lays an important material basis for transformational development. Intelligent manufacturing pilot demonstration should be carried out in the key industry, through building the intelligent plant and fully upgrading the production operation efficiency, the intrinsic safety level of chemical production will be greatly enhanced. Currently, intelligent manufacturing pilot demonstrations should be carried out in petrochemical, refinery, tire industry, fertilizer industries first, gradually be promoted to more industries and enterprises. All of above will help the overall transformation and upgrading of intelligent equipment and intelligent manufacturing in chemical industry.
- Bring the new opportunity of fully promoting green development to petrochemical and chemical industry. Made-in-China 2025 puts forward the overall implementation of green manufacturing, promotes green transformation in petrochemical, chemical and other traditional manufacturing industries, puts forward clear goals and requirements for petrochemical and chemical industry. Chemical products have closely connected with people’s life, green manufacturing seems especially important. Promote greatly the bio-industry development, control and cut down the consumption of fossil energy. Overall carry out the cycle production mode, accelerate the linking intergrowth, raw materials supply and resource sharing between the enterprises, plants and industries. Through developing green plants and promoting the industry coupling of industrial parks, this will realize near-zero emissions. Giving priority to fossil raw materials, large resource consumption and pollutant emission, long chemical industry chain, mostly liquid and gas products, etc, all above typical characteristics make chemical industry to be a circular economy. Along with the gradually standardized development of Chemical Parks (Chemical plants), it is truly to make chemical industry really step into healthy development path of green, low carbon and cycle development. Meanwhile, membrane materials, absorption materials and so forth, which are known as the important material and technical support for treatment of sewage and air pollution, are technical supports of manufacturing industry to realize green development.
- “Internet +” agricultural materials: E-commerce is expected to develop quickly; Internet + agricultural materials will be a hot spot of “Internet +”, this will embody in chemical industry. Currently, many chemical fertilizer enterprises are highly motivated. Made-in-China 2025 will vigorously promote the development of agricultural materials E-commerce. The chemical industry, especially the chemical fertilizer and pesticide industry, is an important support of promoting agricultural modernization. With the development of Internet technology and improvement of rural information facility, agricultural materials promotions are bound to be shown on the E-commerce platform. Agricultural materials consumption is the very important part of total rural consumption, What if we combined the E-commerce platform with agricultural materials? Peasant households would be bound to get brand new kinds of consumption and service experience. Quick land transfer and the entity business model (which means that cooperative and planting bases gradually replace the scattered peasant households) offer favorable conditions for agricultural materials E-commerce. E-commerce urges the formation of new type agricultural materials service ecosphere; as the service entity, agricultural materials distributors have dominant advantage of soil testing and fertilizer recommendation, fertilizer service and field management. Guide the establishment of agrochemical service platform in the chemical industry, give full play to the function of industry association, put the chemical fertilizer, pesticide and agrochemical service in the agrochemical service platform, use the Internet advantage, guarantee the quality of agricultural materials, reduce the circulation cost of agricultural materials; through agrochemical service level, improve the fertilizer utilization ratio, earnestly serve agriculture, rural areas and farmers.
- Bringing huge development space to new chemical materials industry, new chemical material is an important component of the new materials industry, this is not only an important foundation for developing the emerging industry, but also an important direction of traditional petrochemical and chemical industry transformation, upgrading and development. Since the new century, with sustained and rapid growth of China’s national economy and vigorous development of high technology, it expands the unprecedented broad market for development of new chemical materials industry. In 2010, output value of Chinese new chemical materials is about RMB 170 billion Yuan; it exceeds RMB 300 billion Yuan in 2015, annual average growth rate is about 15%, is about double of GDP growth rate in the same period. The data shows that external dependence of Chinese new chemical materials industry is over 40% now, external dependence of some high-end electronic chemicals even exceed 90%.
The implementation of Made-in-China 2025 brings huge development space to the chemical materials industry. New materials are not only one of ten major key fields of development, but also the foundation and support of other nine fields. In five major engineering of Made-in-China 2025, industrial strong foundation engineering requests that increase the research and development strength of special foundation materials, improve the special materials self-supplying guarantee ability and preparation technology level.
Further, the Application of energy conservation and environmental protection technology in green manufacturing engineering, prevention and control of atmosphere, water and soil pollution source brings huge market space to development of new chemical materials industry. Carry Out the outline spirit; vigorously promote the industry from big to strong.
China is an economic giant, making the self-supporting ability and advantages of traditional industry such as petrochemical and chemical industry important components of the country’s Developing Strategy. Aiming to become a powerful manufacturing country, China also seeks to become a powerful petrochemical and chemical industry country.
To become the most powerful petrochemical and chemical industry country in the world, it should have 4 following characteristics:
- Firstly, it should have a batch of industrial core technologies with independent intellectual property rights and the state-of-the-art technology. which may lead the industry development trend.
- Secondly, it should own a batch of enterprises and enterprise groups with international competition advantage;
- Thirdly, it should have stronger ability of industry international investment, operation and trade;
- Fourthly, it should have a batch of first-class technology and management talents with international competition advantages, own a collection of products and brands with international influence.
The petrochemical and chemical industry should thus earnestly carry out Made-in-China 2025, sticking to the basic principle of “market-oriented, government-guiding, standing from the present, thinking long-term, whole advancement, key breakthrough, autonomous development, openness and cooperation”, grasp firmly the historical opportunity of comprehensively deepening reform and promoting economic structure strategic adjustment, face the personalized and differentiated demand for industrialization, informationization, urbanization and agricultural modernization, and green low carbon development trend, adopt science and technology innovation, system innovation as main driving force, adopt raw materials route diversification, high-end product structure, product layout intensification, energy conservation and environmental protection ecologization, deep integration of informatization and industrialization as main development path, promote the transformation and upgrading of China’s petrochemical and chemical industry, realize intensive, clean, low carbon, safe and sustainable development, strive to develop into petrochemical and chemical industry powerful nation in about 10 years.
It mainly includes the following mainlines:
(I) carry out the spirit of Made-in-China 2025 in the “13th Five-Year” planning. The “13th Five-Year” planning in petrochemical and chemical industry is preparing now, spirit of Made-in-China 2025 should be fully implemented in the planning. Standing at the new historical starting point of industry development, the “13th Five-Year” strategic goal of China’s petrochemical and chemical industry should orientate the crossover of world petrochemical and chemical industry powerful nation. A series of profound changes of China petrochemical industry are being done and to be done, during the 13th Five-Year planning, for example, the impact of North America Shale Gas Revolution and Middle East cheap oil and gas resources, structural adjustments of Japanese and Korean petrochemical industry, which is aiming at Chinese market, are accelerated, each country is seizing the commanding heights of technological innovation, implementation of China’s “One Belt One Road” strategy and so forth.
The development environment of world petrochemical and chemical industry requests China’s petrochemical and chemical industry to enlarge the independent innovation strength and accelerate the upgrading of industry competitiveness.
Current situation of China’s petrochemical and chemical industry structure also requests China to strengthen technological innovation, accelerate the industry transformation and upgrading. According to the latest industry structure analysis in 2014, product and technology structures of China Petrochemical Industry are still low-end, backward and homogeneous as a whole; high-end manufacturing industry and strategic emerging industry are serious insufficient.. Industry structure contradictions have become increasingly prominent and sharp, which push the adjustment of industry structure in hurry. Therefore, during the “13th Five-Year” planning, China’s petrochemical and chemical industry should follow the principle of “Do Something but not Everything”, also concentrate efforts, standing out the emphases, promoting it in combination, with the goal of making breakthroughs in the field of industry structure upgrade and industrial competitiveness upgrading. In terms of the planning compilation, it should increase the industrial independent innovation ability, promote the deep integration of informatization and industrialization, fully promote green manufacturing, and break through the bottleneck of new key chemical materials industrialization.
(II) As far as the new strategy of innovative driving in the whole industry is concerned, China’s petrochemical and chemical industry development faces a series of outstanding contradictions and challenges, such as excess production capacity, aggravated constraint of resources and environment, rising factor costs and weaker innovation ability; science and technology innovation will solve the contradiction and challenge. Innovation is one mainline of Made-in-China 2025.
The first project of five major projects is to build the national manufacturing industry innovation centre. In accordance with the requirements of Made-in-China 2025, China needs to speed up the petrochemical and chemical industry innovation system, build the national innovation centre of petrochemical and chemical industry.
Firstly, we need to accelerate the establishment of “industry-university-research” collaborative innovation system, which means to build a batch of industry innovation systems facing the regions and the whole country.
Secondly, we also need to build the public service platform for key industries, such as additive manufacturing technology innovation centre, carbon fibre united innovation centre.
Thirdly, we should concentrate investments and efforts to make breakthroughs in a number of core and key technologies, such as high-end carbon fibre, electronic chemicals and 3D printing materials and so on.
Industrial sci-tech innovation should focus on the industry chain patterns; we should deploy a batch of sci-tech innovation key tasks in petroleum refining, modern coal chemical industry, new chemical materials, fine chemical industry, energy conservation, emission reduction and other key fields.
Through laying out the sci-tech innovation key tasks and building the innovation platform, China strives to build a batch of major industrialization engineering during the “13th Five-Year” planning, such as megaton coal to aromatics industrialization engineering; build a batch of cutting edge sci-tech plants in modern coal chemical industry, basic chemical industry, new energy and new material fields; own a batch of key technologies in new energy, new materials and fine chemical fields; obtain a batch of independent intellectual property rights patent technologies in high performance fluororubber, organosilicone sealant, polyimide fibre, adiponitrile and neoprene.
(III) Vigorously promote the deep integration of information and industrialization, which is an effective method of promoting the petrochemical and chemical industry transformation and upgrading; petrochemical and chemical industry adopts intelligent manufacturing, wisdom plant group, agricultural materials E-commerce and agrochemical service as main attack direction of promoting deep integration of informatization and industrialization.
Firstly, accelerate the construction of intelligent plants. Information technology, which includes IOT, big data and cloud computing, should be fully exploited for making breakthroughs of a batch of key intelligent manufacturing technologies. That will comprehensively enhance the perception, forecast, coordination, analysis, control and optimization ability of petrochemical and chemical enterprises. Through the optimized control of production process intelligentization, operation automatization and real-time on-line optimization level will be upgraded; Through on-line optimization of energy production and consumption, energy conservation and emission reduction level will be improved; Through the automatic monitoring and automatic warning of storage and transportation of combustible gas, hazardous and noxious substances, emission of waste gas, waste water and other pollutants, safety environmental protection level will be enhanced; Through due early warning and preventive maintenance of key equipments, assets life cycle management will be improved; Through establishing new type production and operation management mode, supply chain will be optimized( which is based on value chain), resource allocation and logistics management level will be improved.
Secondly, promoting the pilot intelligent Chemical Park. We should strengthen the standard and interface construction, formulate the standards and regulations relevant to park informatization construction, promote and optimize the construction of park informatization infrastructure, form the environment of information resource combination and Internet sharing, Integrate the business data of relevant departments in the park, build the public basic database of the park, realize the data sharing with the resident enterprises. Through cloud computing, big data, Internet of things, geographic information system and other information technologies, we should push the park to build the online trading, modern logistics, inspection, detection and other public service platforms. We should fully exploit the advantages of information resources in the park, combining with intelligent city construction, make experiments in building the intelligent Chemical Park of upgrading the safety management, environmental protection, energy management, emergency rescue and public service capacity in the conditional areas. Through building the intelligent Chemical Park, we also need to vigorously upgrade the safety environmental protection level of the park.
Thirdly, to encourage the development of agricultural materials E-commerce and agrochemical service; through integrating the links and elements of production service, in accordance with requirements of high starting point, large platform and deep fusion, promote B2B, B2C and other modes in chemical fertilizers, pesticide and other agricultural materials fields, we should innovate new modes and new business formats, gradually reform the agricultural materials circulation channel, eliminate the inefficient and redundant links, reduce the fertilizer using cost of peasants, crack down forged and fake commodities, upgrade the channel value. Provide finance, insurance, logistics and other services, integrate the manufacturers and distributors at all levels, and build the agricultural materials ecosystem. Vigorously promote the agrochemical service, in accordance with soil, climate and other basic data, center on crop nutrition and protection, build the agrochemical service platform, and provide the remote expert consultation, price of agricultural products, diagnosis of plant diseases and insect pests, agricultural weather and other services.
(IV) Promoting green development in the whole industry. Made-in-China 2025 has put forward clean requirements for green development in chemical industry, which not only increases the pressure but also provides the motivation. Tasks of industrial green manufacturing are arduous and pressing, place emphasis on the following acting points:
Firstly, standardizing the development of Chemical Park, strictly implementing the relevant safety distance standards of Chemical Park, select the site scientifically, and highlight the perceptiveness.
We must implement all kinds of safety production and environmental protection systems, strengthen the safety management and environmental monitoring of Chemical Park, carry out the responsible care, upgrade the intrinsic safety and clean production level. We also need to strengthen the park entering project evaluation review, strictly follow the industrial policy, stick to the concept of circular economy and energy high efficiency (steps) utilization, and upgrade the industry development quality and benefit of the park. We should perfect the infrastructure and public works supporting, upgrade the informatization level and public service capacity of the park, encourage the construction of Wisdom Park.
Secondly, strengthen the safety management of hazardous chemicals. We should promote the high risk hazardous chemicals relocation and transformation in the urban densely inhabited district, optimize the distribution of Chemical Park and hazardous chemical enterprises along Yangtze River, and prevent the safety and environmental protection risk of hazardous chemicals. We will explore the establishment of hazardous chemicals traceability system; strengthen the management and control of hazardous chemicals risk source.
Thirdly, promote the transformational development of chemical fertilizer and pesticide industry. Promote the intelligent fertilizer preparation, realize the precision fertilization, improve the fertilizer utilization efficiency, and reduce the agricultural non-point source pollution. Further reduce the proportion of highly toxic pesticides, vigorously develop highly effective water-based pesticide, and reduce the use of organic solvents.
Fourthly, support the development of bio-based chemical materials; reduce the source of fossil energy. Speed up the research and development of bio-based plasticizer, guarantee the food safety.
Fifthly, actively promote green building materials. Actively carry out the evaluation of green building materials, promote the application of water-based coatings, PVC with eco-friendly plasticizer, eco-friendly adhesives, polyurethane thermal insulation materials conforming to fire rating in green buildings.
(V) Vigorously develop new material, which meets national strategic demands, we should speed up the cultivation of new chemical materials, biochemical and other strategic emerging industries and improve the innovation ability of high-end products. In the application-oriented environment, we need to accelerate the fusion development of upstream and downstream, provide new chemical materials for electronic information industry, high-end equipments, energy conservation and environmental protection new requirements, population aging and other new markets. We also need to focus on strengthening the development of engineering plastics, high-end polyolefin plastics, polyurethane, high performance rubber, high performance fibre and composite materials, functional membrane materials, fluorosilicone materials, electronic chemicals and 3D printing materials.
Firstly, strengthening the policy guidance and promoting the process of industrialization.
While speeding up the establishment of new materials engineering supporting the construction of public service platform industrialization and demonstrative application of new chemical materials technological transformation, strong foundation engineering, new materials research and development,
Secondly, accelerating the combination of government-industry-university-research and guiding the establishment of industry alliance. The government can serve as a bridge between industries; in the key new chemical materials industry, government will guide the establishment of upstream and downstream coordinated development industry alliance, which will eliminate the barrier of hindering the industry development.
As an important basic industry, new materials chemical industry should break the industry boundary during its development; high-end equipments also require high-performance engineering plastics and carbon fibre composite materials; the development of electronic information industry can’t do without the guarantee of electronic chemicals; more importantly, green building requires green chemical building materials. Through establishing upstream and downstream coordinated development industry alliance, carrying out the cross-boundary cooperation, we should accelerate the industrialization and application of new materials.
Thirdly, making enterprises bigger and stronger, promoting the industry intensive development. To encourage enterprises to become bigger and stronger through mergers and acquisitions as well as strategic cooperation, we will be able to establish several new material enterprise groups with international competitiveness. Upstream and downstream relevance of new chemical materials industry is pretty strong. Encouraging building the chemical industry cluster surrounded by large-scale enterprises, the establishment of chemical industry Parks can greatly save the transportation cost and be beneficial to the industry chain supporting between the enterprises, which will increase the overall competitiveness.
(VI) Grasp the strategic opportunity of “One Belt One Road”, by increasing the international operating capacity. The Silk Road Economic Belt and the 21st-century Maritime Silk Road or “One Belt One Road” runs through Asia, Europe and Africa, covering a population of 4.4 billion. The economic aggregate of the countries along the Belt and Road is about US $ 21 trillion, vast hinterland countries in the middle are mostly oil and gas resources producing areas or regions with huge development potential, provide new opportunity for optimizing ethylene raw materials, broadening the import channel of petrochemical products and carrying out international production capacity cooperation. In order to better promote the enterprise “Going Global”, it can be necessary to acquire overseas oil and gas resources or carry out international production capacity cooperation.
Thus, the following aspects of work should be strengthened:
Firstly, build the platform. The government builds the information sharing platform for specific areas, provides the industry demands, investment policy regulations, employment requirements, taxation requirements and other relevant information of opposite country for the enterprises, does well the guidance of overseas investment orientation, increases “Going Global” targeted and risk prevention capacity of enterprises.
Secondly, planning in advance. Depending on the trade association, put forward the project list by country, organize the enterprises to conduct the targeted docking with the industries of opposite country, the projects which are recognized by both parties in technical level should be taken into account by national strategic overall planning; depend on the bilateral and multilateral dialogue between governments and other opportunities, adopt the project cooperation as one of important issues, improve the recognition of the opposite country for our industries, create the political environment beneficial for enterprise “Going Global”, carry out the cooperation in practice.
Thirdly, encourage enterprises to unite for “Going Global” using different modes.
Firstly, we should encourage the cooperation between private enterprises and state-owned enterprises, gather together to “Going Global” through establishing mixed ownership, not only reduce the political sensitivity of state-owned enterprises “Going Global” separately, but also solve the problems of lacking funds, talents and experience for private enterprises “Going Global” separately.
Secondly, we should also adopt the specific regions or upstream and downstream supporting of industry chain as starting point, encourage the superior private enterprises to form the union and “Going Global” together.
Thirdly, we need toseek the partners in different countries, especially the enterprises with strong risk resistance capacity as the partners; improve the safety of investment project. Fourthly, the financial insurance support should be strengthened. According to the characteristics of large investment and high risk at the beginning of oil and gas project and petrochemical project, implement and perfect the finance and taxation support policy, establishing the coordination mechanism between petrochemical/ chemical enterprises/China Development Bank/ Silk Road fund /other financial institutions or insurance institutions and solving the financial demands of enterprise overseas are all imminent.
Pan Aihua is the Director-General of Raw Material Industry Division, Ministry of Industry and Information Technology, China.
This article was originally published as a white paper available from Process Worldwide.