The State Council issued a directive yesterday: no new production capacity for these fertilizers is allowed! !

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The State Council issued a directive yesterday: no new production capacity for these fertilizers is allowed! ! Author/Source: Agricultural Materials Herald Date: August 5, 2016 Page views: 28 On August 3, 2016, the State Council issued the “Guiding Opinions on Adjusting the Structure, Promoting Transformation, and Increasing Efficiency in the Petrochemical Industry” (hereinafter referred to as the “Opinions”), which put forward the general requirements, key tasks, and safeguard measures for the sustained and healthy development of China’s petrochemical industry. One of its key tasks is to strive to resolve overcapacity. Strictly control the addition of new production capacity in industries with excess capacity, such as urea, ammonium phosphate, calcium carbide, caustic soda, polyvinyl chloride, soda ash, and yellow phosphorus. Furthermore, the State Council has explicitly stated its support for advantageous petrochemical industries such as fertilizer manufacturers to go global and engage in international capacity cooperation. 　　To implement the **decisions and arrangements regarding the advancement of supply-side structural reforms and the development of a strong manufacturing sector, and to promote the sustainable and healthy growth of the petrochemical industry, the General Office of the State Council has outlined seven key tasks in its guiding principles: reducing excess production capacity, optimizing industrial layout, upgrading traditional industries, ensuring safe and green development, improving the innovation system, facilitating mergers and reorganizations, and strengthening international cooperation in capacity building. It is necessary to make full use of the comparative advantages of China’s traditional petrochemical industry. In line with the Belt and Road Initiative, efforts should be made to promote international capacity cooperation in industries such as methanol, fertilizers, and pesticides, to establish overseas industrial parks, to foster chain-based transfers and intensive development, and to encourage the export of related technologies, equipment, and engineering services. 　　China’s petrochemical industries, such as the fertilizer industry, have already acquired the capability to “go global”. Since the reform and opening up, China’s petrochemical industries, such as those producing fertilizers, three acids and two alkalis, and olefins, have made significant progress. The output of their key products ranks among the highest in the world, and positive results have been achieved in terms of technological innovation, energy conservation and emission reduction, as well as international cooperation. In particular, the development of the chemical fertilizer industry has made an indelible contribution to China’s food security. China has achieved self-sufficiency in nitrogen and phosphate fertilizers, with a significant increase in the self-sufficiency rate for potassium fertilizers as well. China has reached an internationally advanced level in fertilizer production technology and equipment manufacturing; it not only meets the needs of its domestic fertilizer industry but has also begun to export such technologies and construction projects. China has become the world’s largest exporter of nitrogen fertilizers and phosphate-based compound fertilizers, and the quality standards for both traditional and new types of fertilizers have been recognized by the international market. China has also made great progress in research on scientific fertilization techniques, plant nutrition, and soil fertility science. 　　“Agriculture along the Belt and Road Initiative not only needs to import agricultural inputs such as fertilizers from China, but also requires broader cooperation from China in areas such as fertilizer production equipment, fertilization techniques, and the development of new types of fertilizers. “Along the Belt and Road Initiative, there are over 60 countries and regions, with a combined population of about 3 billion people. Most of these **countries and regions are developing**, with a low level of urbanization, a large rural population, and many poor people; agriculture remains the most important sector of their economies. In the regions along this route, the larger populations are **primarily found in South Asia and Southeast Asia, and what these populous countries have in common is a relatively high proportion of rural population. India, Indonesia, Pakistan, Bangladesh, the Philippines, and Vietnam are among the top 6 countries along the Belt and Road in terms of the number of personnel. The total population of these 6 ** regions exceeds 2 billion people, accounting for two-thirds of the total population of all ** regions along the Belt and Road (excluding China). The population proportion of these 6 **towns is relatively low ； Among them, the proportion of urban population in India and Vietnam is only 32%, 38% in Pakistan, and 33% in Bangladesh. Rural areas with a small urban population determine the role of agriculture in these economies’ national economies. Of this **total amount of fertilizers imported from the international market, more than half comes from China** ； Apart from potassium fertilizers, nitrogen fertilizers and phosphate compound fertilizers are almost entirely imported from China. 　　Import situation of certain fertilizers along the Belt and Road routes (2015)
The following is a portion of the “Opinions” for your reference:

Guiding Opinions of the General Office of the State Council on Adjusting the Structure, Promoting Transformation, and Increasing Efficiency in the Petrochemical Industry
Document No. Guo Ban Fa [2016] 57

People’s governments of all provinces, autonomous regions, and municipalities directly under the Central Government; all ministries and commissions of the State Council, as well as agencies directly subordinate to it:

The petrochemical industry is a vital pillar industry of the national economy. It features a wide range of products, high capital and technology intensity, and strong industrial linkages. It plays a crucial role in stabilizing economic growth, improving people’s livelihoods, and ensuring national defense security. Since the reform and opening up, China’s petrochemical industry has made significant progress; the output of its key products ranks among the highest in the world. Positive results have been achieved in terms of technological innovation, energy conservation and emission reduction, as well as international cooperation. However, issues such as structural overcapacity, weak independent innovation capabilities, unreasonable industrial layout, and increasing pressure related to safety and environmental protection still exist, which hinder the overall transformation and upgrading of the petrochemical industry. To implement the decisions and arrangements of **** and the State Council regarding the advancement of supply-side structural reform and the building of a strong manufacturing nation, as well as to promote the sustainable and healthy development of the petrochemical industry, the following guidelines are hereby proposed with the approval of the State Council: 　　I. General Requirements 　　(1) Guiding Principles. 　　…… …… 　　(II) Basic principles. 　　…… …… 　　(III) Main objectives. 　　…… …… 　　II. Key Tasks 　　(1) Make efforts to resolve overcapacity. Strict control should be exercised over the addition of production capacity in industries with excess capacity, such as urea, ammonium phosphate, calcium carbide, caustic soda, polyvinyl chloride, soda ash, and yellow phosphorus. Relevant departments and agencies must not handle matters such as land (sea area) allocation, energy assessments, environmental impact assessments, or the issuance of new credit facilities in violation of regulations. For projects that involve the upgrading of advanced manufacturing processes and meet the policy requirements, equivalent or reduced replacement should be implemented. No new oil refining and chemical projects that are not included in the “Plan for the Layout of the Petrochemical Industry” shall be constructed. Formulate capacity replacement plans, make full use of measures such as safety, environmental protection, energy conservation, and pricing to drive the withdrawal of outdated and inefficient production capacities, thereby creating greater market space for advanced production capacities. (**The National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Land and Resources, the Ministry of Environmental Protection, the Ministry of Commerce, the State Administration of Work Safety, **the National Energy Administration, and the people’s governments at the provincial level are each responsible for**) (2) Coordinating and optimizing the industrial layout. By taking into account factors such as resource supply, environmental capacity, security guarantees, and industrial infrastructure, the layout of the petrochemical industry is improved, and the construction of the seven major petrochemical industrial bases along the coast is advanced in an orderly manner; new projects in oil refining, ethylene, and aromatics are introduced to these petrochemical industrial bases step by step. Strengthen the planning and construction of chemical industrial parks, carry out pilot projects for smart chemical parks, and conduct comprehensive evaluations and information disclosure in accordance with the law. In areas of the central and western regions that meet the resource and environmental requirements, the modern coal chemical industry should be developed in an orderly manner, in conjunction with the development of large-scale coal bases and in accordance with the environmental access criteria. (**The National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Land and Resources, the Ministry of Environmental Protection, the Ministry of Water Resources, the Ministry of Commerce, the State Administration for Work Safety, and the **Energy Bureau are each responsible for this.) (3) Transforming and upgrading traditional industries. Utilize advanced technologies such as clean production and intelligent control to upgrade existing production facilities, improve product quality, reduce consumption and emissions, and enhance overall competitiveness. Encourage the construction of clean oil product facilities such as hydrocrackers, continuous reformers, isomerization units, and alkylation units to promptly improve oil product quality. Accelerate the technological upgrades of refining and ethylene plants, adjust the diesel-to-gas ratio as appropriate, and optimize the raw material mix. Advance the construction of petrochemical industry bases and major projects, enhance the supply capacity for basic products such as olefins and aromatics, and improve the level of integration in refining and chemical processing. Expand the application areas of traditional chemical products, and support the export of high-capacity production in areas such as fertilizers and lubricants. (**The National Development and Reform Commission, the Ministry of Science and Technology, the Ministry of Industry and Information Technology, the Ministry of Commerce, the **Energy Administration, and the people’s governments at the provincial level are each responsible for**) (IV) Promoting safe and green development. Strengthen the safety production responsibility system, explore full-track tracking of high-risk hazardous chemicals, and carry out safety and environmental protection-related relocation and renovation of hazardous chemical manufacturing enterprises. Improve the monitoring, fire protection, emergency response and other system platforms in chemical industrial parks, promote information sharing, and strengthen the foundation for safe production. Strengthen the requirements regarding safety and health protection distances as well as constraints imposed by environmental impact assessments in planning. Chemical industrial parks and chemical storage projects that fail to meet these requirements must be shut down and phased out. Enterprises producing hazardous chemicals must relocate and undergo renovations, while new chemical projects must be established within properly regulated chemical industrial parks. Accelerate the development and application of clean production technologies, intensify efforts to control key pollutants such as volatile organic compounds and highly concentrated, hard-to-degrade wastewater, and improve the comprehensive utilization level of industrial waste. Implement the energy efficiency leader system and improve the energy-saving standard system. (**The National Development and Reform Commission, the Ministry of Science and Technology, the Ministry of Industry and Information Technology, the Ministry of Environmental Protection, and the State Administration for Work Safety are each responsible for this.) (V) Improve and strengthen the innovation system. Improve the industry-led collaborative innovation system integrating research, development, production, and application, and establish a number of strategic alliances for technological innovation ； Integrate R&D platforms such as technology centers, engineering research centers, key laboratories, and engineering laboratories, increase efforts in talent training and recruitment, and accelerate scientific and technological research and development as well as the transformation of research results. Expand the scope of pilot projects for intelligent manufacturing in the petrochemical industry, and encourage industries such as refining, tires, fertilizers, and chlor-alkali to carry out pilots for smart factories and digital workshops. Establish energy management information systems to enhance enterprises’ capabilities in refined management. Focusing on high-end demands in aerospace, defense and military industry, electronics, and other fields, efforts will be made to develop new chemical materials such as high-performance resins, special synthetic rubbers, high-performance fibers, functional membrane materials, and electronic chemicals. Several new materials industry alliances will be established to enhance the capacity to supply such materials. (**The National Development and Reform Commission, the Ministry of Education, the Ministry of Science and Technology, the Ministry of Industry and Information Technology, the Ministry of Agriculture, and the **Energy Administration are each responsible for this.) (6) Promote corporate mergers and reorganizations. Implement support policies in areas such as finance and taxation, banking, land use, and employee resettlement, remove institutional barriers to mergers and reorganizations across regions and different forms of ownership, and create a fair market environment for such activities. Efforts will be focused on promoting mergers and reorganizations among traditional chemical enterprises, optimizing the allocation of resources such as capital, technology, and talent, enhancing industry concentration and competitiveness, and fostering a number of large-scale enterprise groups with international competitiveness. (**The National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Finance, the Ministry of Human Resources and Social Security, the Ministry of Land and Resources, the Ministry of Commerce, the People’s Bank of China, the State-owned Assets Supervision and Administration Commission of the State Council, the State Administration for Market Regulation, the China Banking Regulatory Commission, the China Securities Regulatory Commission, and the people’s governments at the provincial level are each responsible for**) (7) Strengthening international capacity cooperation. Fully leverage the comparative advantages of China’s traditional petrochemical industry, and in line with the Belt and Road Initiative, actively promote international capacity cooperation in key industries such as refining, olefins, methanol, tires, fertilizers, pesticides, dyes, chlor-alkali products, and inorganic salts. Establish overseas petrochemical industrial parks, foster chain-based transfers and intensive development, and encourage the export of related technologies, equipment, and engineering services. Foreign investment is encouraged to participate in the merger and restructuring of domestic enterprises, and China’s large petrochemical companies are supported in carrying out cross-border operations, with contingency plans for risk management prepared in advance. (**The National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Commerce, the State-owned Assets Supervision and Administration Commission of the State Council, **the Energy Bureau, and the people’s governments at the provincial level are each responsible for this.) III. Guarantee measures (1) Revise and improve industrial policies. Adjust industry entry requirements and licensing conditions as appropriate, accelerate the formulation and revision of regulatory standards for key industries and products, and timely revise the \"Petroleum and Chemical Industry Planning and Layout Plan\" to effectively leverage the regulatory and guiding role of policies. Improve standards for safety, environmental protection, energy conservation, and occupational health to enhance their applicability and effectiveness. In conjunction with the pilot reforms for transmission and distribution pricing, efforts will be made to facilitate direct transactions between petrochemical companies and power generation firms, and qualified petrochemical companies will be supported in carrying out pilot projects related to regional power grids and incremental distribution services. If the coal-fired generating units owned by petrochemical enterprises meet environmental protection requirements, then, on the condition that they bear and pay in full the relevant funds, policy-based cross-subsidies, and system reserve fees as stipulated, any excess electricity generated for their own use can enjoy the same ultra-low emission electricity price support policies as those provided to commercial coal-fired generating units. (**The National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Environmental Protection, the Ministry of Transport, the General Administration of Quality Supervision, Inspection and Quarantine, the State Administration of Work Safety, and the National Energy Administration are each responsible for this.) (2) Increase financial and monetary support. By making use of existing dedicated funding channels as well as central government science and technology programs (special projects, funds, etc.), greater support should be provided for the technological upgrading of the petrochemical industry, the development of high-end products, green and safe production practices, pilot projects in intelligent manufacturing, the relocation of hazardous chemical manufacturing enterprises, the construction of public service platforms, and scientific research and development efforts. Relevant regions may, depending on actual conditions, use funds for air pollution control to support petrochemical enterprises’ own power plants in carrying out ultra-low emission upgrades. In line with the requirements to deepen tax system reform, accelerate the reform of levying taxes on chemical mineral resources on a value-based basis, and streamline and standardize relevant fee-based funds. Explore supporting the initial application of new chemical materials through insurance compensation mechanisms. Guide financial institutions to implement a credit policy that combines support and regulation, and vigorously develop green credit services such as energy-efficiency-related lending, pledged loans secured by future revenue rights under energy performance contracting agreements, mortgage loans using pollution discharge rights as collateral, and mortgage loans using carbon emission rights as collateral. (**The National Development and Reform Commission, the Ministry of Science and Technology, the Ministry of Industry and Information Technology, the Ministry of Finance, the Ministry of Land and Resources, the Ministry of Environmental Protection, the Ministry of Commerce, the People’s Bank of China, the General Administration of Customs, the State Taxation Administration, the China Banking Regulatory Commission, the China Securities Regulatory Commission, and the **Energy Administration are each responsible for their respective tasks.) (III) Strengthen supervision and inspection mechanisms. It is necessary to enforce enterprises’ primary responsibility for safe production, strictly implement the registration system for hazardous chemicals as well as the \"three simultaneities\" principle for construction projects, and order those enterprises that do not meet safety production standards to suspend operations for rectification or close down. Increase the intensity of law enforcement inspections regarding safety, environmental protection, quality, and energy conservation, and strengthen the online monitoring and networked management of pollutants. Take strict action against illegal practices such as passing off inferior products as high-quality ones, counterfeiting and substandard goods, and tax evasion, in order to maintain a fair market environment. Leverage the bridging role of industry associations to promptly reflect the needs of enterprises, provide feedback on the implementation of policies, and encourage enterprises to strengthen self-discipline. (The Ministry of Environmental Protection, the State Taxation Administration, the State Administration for Industry and Commerce, the General Administration of Quality Supervision, Inspection and Quarantine, the State Administration of Work Safety, the China Petroleum and Chemical Industry Federation, and relevant industry associations are each responsible for their respective tasks.) All regions and departments must attach great importance to this matter, share a common understanding, fulfill their responsibilities earnestly, further clarify the objectives and tasks, improve policy measures, guide public opinion properly, and ensure that all work is carried out effectively. Provincial people’s governments should, in light of local conditions, ensure effective organization and implementation. **The National Development and Reform Commission and the Ministry of Industry and Information Technology should, in conjunction with relevant departments, strengthen supervision and guidance at the local level. All relevant departments shall, in accordance with their respective responsibilities, expedite the formulation of supporting policies to advance all related tasks in a coordinated manner. 　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　General Office of the State Council　　　　　　　　　　　　　　　　　　　　　　 July 23, 2016