Petroleum and Chemical Industry Planning Institute: Accelerate the development of a modern industrial system to promote the construction of a strong petrochemical industry

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http://www.ccin.com.cn/detail/824680a15ac7a40a897707b1d0e2ed2d/news China’s petrochemical industry leads the world in terms of overall scale. Since the start of the 14th Five-Year Plan period, driven by efforts to deepen supply-side structural reforms and promote high-quality development of the industry, China’s petrochemical sector has seen continuous improvements in both scale and quality. In 2021, China’s ethylene production capacity and output surpassed those of the United States for the first time, making it the world’s largest producer of ethylene ； In 2022, China’s refining capacity surpassed that of the United States, making it the country with the largest refining capacity in the world ； In 2023, China’s refining and ethylene production capacities accounted for 18% and 22% of the global total, respectively. “Since the 14th Five-Year Plan period, the total profits and operating revenues of China’s petrochemical industry reached record highs in 2021 and 2022 respectively ； In 2023, the national petrochemical industry generated main business revenue of 15.95 trillion yuan and total profits of 873.36 billion yuan, representing increases of 44.0% and 69.4% respectively compared to 2020. These figures accounted for 12% and 11.4% of the total industrial output in the country respectively. Overall, the performance of this industry showed steady progress and improvement. China’s production capacity for a variety of chemical products remains at the world’s leading level. The output of products such as methanol, caustic soda, soda ash, calcium carbide, fertilizers, sulfuric acid, synthetic resins, active pesticide ingredients, and tires consistently ranks first in the world, making significant contributions to the development of the global petrochemical industry. China’s petrochemical industry is in an important stage of transitioning from a major petrochemical producer to a strong one. However, compared with petrochemical powerhouses such as those in Europe, the United States, and Japan, China’s industry still faces a range of issues, including prominent structural and transitional contradictions, insufficient supply of high-end products, high carbon emissions, significant pressure to reduce carbon emissions, a need to improve innovation capabilities, increasing constraints related to resources and the environment, and a need to enhance its level of internationalization. Under the new circumstances, the industry faces both challenges and opportunities for high-quality development. The \"Decision of the Central Committee of the Communist Party of China on Further Deepening Reforms and Advancing Modernization in the Chinese Style,\" adopted at the Third Plenary Session of the 20th CPC Central Committee, clearly states that high-quality development is the top priority in the comprehensive construction of a socialist modernized country. “The 15th Five-Year Plan period is a crucial time for China to advance from a major country in the petrochemical industry to a leading one. During this period, efforts will be accelerated to promote new types of industrialization and the development of new forms of productive capacity, with a focus on establishing a modern petrochemical industry framework. Under the new circumstances, significant changes have taken place in aspects such as the supply-and-demand dynamics of the industry, green and low-carbon requirements, the landscape of international cooperation, and technological advancements. As a result, the industry’s development models, drivers of growth, and directions for transformation and upgrading will all experience new changes. In terms of challenges, first is the significant impact of global economic uncertainty on industry growth. “During the 15th Five-Year Plan period, uncertainties in global economic development are on the rise, placing significant pressure on the petrochemical industry to maintain growth. Second, the imbalance between supply and demand further intensifies market competition. “During the 15th Five-Year Plan period, the supply capacity for olefins, aromatics, and their main derivatives will continue to increase at a rapid pace, with the rate of supply growth exceeding that of downstream consumption demand. Third, the constraints imposed by resources and the environment are becoming increasingly severe. “The resource profile of \"low oil, low gas, and high coal\" determines that the carbon emission ratio of China’s petrochemical industry is much higher than the global average. With the official implementation of the EU Carbon Border Adjustment Mechanism (CBAM) and other similar measures, it is likely that these will have a significant impact on the export of related products from our country in the future. Fourth, the uncertainty in the international environment increases the risks to the security and stability of industrial chains and supply chains. At present, in our country, there are still some new chemical materials, high-end chemicals, and certain key equipment that cannot be produced domestically, leaving us highly dependent on imports from the international community. In terms of opportunities, the first is the improvement in innovation levels and the ability to achieve autonomy and control. At present, the traditional model of introduction, digestion, absorption, and re-innovation can no longer sustain the rapid growth of the industry; instead, the driving force for industry growth will rely more on technological innovation driven by independent intellectual property rights. Second, green and low-carbon products will experience scaled growth. Green products such as green hydrogen, green ammonia, green alcohols, and bio-based materials, as well as low-pollution or pollution-free products like environmentally friendly fine chemicals, PFAS alternatives, and biodegradable plastics, are expected to see cost reductions and broader scale of production and application. Third, demand in high-end manufacturing will gradually increase. “During the 15th Five-Year Plan period, as China’s manufacturing sector advances toward higher-end development, the growth of a large number of high-tech and strategically important emerging industries will inevitably create substantial new demand for petrochemical products. Fourth, the divergence in the global petrochemical industry structure is likely to create new market opportunities. With the profound adjustment of the global energy structure and the rapid development of emerging markets, the global industrial landscape will become further fragmented. China’s petrochemical industry boasts advantages such as high production efficiency, low construction costs, and well-developed infrastructure, providing a foundation for further enhancing its influence within the global industrial framework. “Suggestions for the key development directions of the industry during the 15th Five-Year Plan period: First, enhance the capacity for innovative development. Accelerate the development of a modern petrochemical and chemical industry innovation system centered on enterprises, strengthen the efficient integration of research systems with industrialization frameworks, promote comprehensive and systematic innovation in key areas of the industry, and enhance the rate of conversion of scientific and technological achievements as well as the industry’s competitiveness. Focusing on the weaknesses in the industrial chain and supply chain, such as raw materials and auxiliary materials, high-end equipment, instruments and meters, and key technologies, enterprises are encouraged to form integrated innovation consortia that cover both upstream and downstream sectors. Efforts should be made to carry out original scientific and technological research, so as to create an independent and controllable industrial chain ecosystem and enhance the resilience and security of the industrial chain and supply chain. Second is the optimization and upgrading of the industrial system. Accelerate the structural upgrading of refining units, enhance the capacity for comprehensive resource utilization, and reduce energy and material consumption per unit of product processed. Advance the diversification of olefin feedstocks steadily, and fully tap into the supply potential of domestic light hydrocarbon resources. Improve the level of domestic technology in the aromatics industry, optimize the industrial structure and layout of aromatics, and enhance control over the aromatics industry chain. In the field of new chemical materials, the petrochemical industry should focus on China’s strategic emerging industries and future-oriented industries, and make concerted efforts to accelerate breakthroughs in areas related to key materials such as high-end polyolefins, special engineering plastics, high-performance synthetic rubbers, electronic chemicals, and high-performance membrane materials. Third, optimize and adjust the industrial layout. Based on resource endowments and market location advantages, the overall spatial layout of the petrochemical industry shall be further optimized to enhance the level of coordinated development among upstream and downstream sectors in the region. Industrial relocation shall be carried out in an orderly manner, with the aim of establishing an industrial structure that features rational division of labor, a hierarchical organization, and extensive coverage. Large petrochemical bases along the eastern coast shall be developed into world-class facilities, while a number of specialized chemical production bases shall be established rapidly in inland resource-rich areas. Establish a dynamic adjustment mechanism for chemical industrial parks, continuously promote the dynamic management of their recognition and reevaluation, guide the concentration of resources and factors toward high-performing parks, and enhance total factor productivity. Fourth, accelerate the green and low-carbon transition. Focus on key links across the entire industrial chain to implement energy-saving and carbon-reduction technological upgrades, improve the utilization rate of clean energy resources, and promote the optimization of energy systems. By controlling total carbon emissions as well as their intensity, green and low-carbon development in the industry can be fostered, thereby increasing the proportion of production capacity that meets industry benchmarks. The petrochemical industry should accelerate the establishment of a green manufacturing system throughout the entire life cycle. Enterprises should be encouraged to adopt clean production technologies and equipment to carry out upgrades, thereby reducing waste at the source, and greater efforts should be made to recycle by-products and waste as well as to dispose of them in an environmentally safe manner. Fifth is to promote digital empowerment. Accelerate the \"foundation improvement and supplementation\" as well as the upgrading of new industrial networks, instruments and meters, intelligent equipment, key software, and systems in key sectors of the industry. Promote the establishment of industrial Internet platforms in key areas, chemical industrial parks, and large enterprises, to achieve networked infrastructure, platform-based management, and refined operational services. Make full use of the advantages of rich industry data resources and a solid digital foundation to leverage artificial intelligence technologies for industrial development, and introduce a series of replicable and scalable model applications in fields such as petrochemicals, coal chemicals, and fine chemicals. Sixth, it is necessary to establish a solid foundation for safe development. Enterprises are encouraged to use advanced technologies and equipment to upgrade old installations, to further advance the development of \"Industrial Internet + safe production of hazardous chemicals,\" and to coordinate the development, application, and integration of relevant information systems in order to improve the ability to monitor and detect risks related to the safe production of hazardous chemicals. Strengthen enterprises’ primary responsibility for safe production, promote the implementation of responsible care, advance the construction of training facilities in chemical industrial parks in an orderly manner, and enhance the safety awareness, safety skills, and emergency response capabilities of workers.