Chemical Sector
Foreign Investment in China Continues to Grow
Overseas investment in China is expected to be over $40 billion this year, reaching record levels. 22,000 foreign-funded enterprises with actual investment of $36.9 billion had been established in the first 11 months of this year. This represent investment growth of 16% over 1995, even though the number of approved projects was 20% lower. The investment growth was spurred by major transnational companies providing funding for projects in infrastructure, machine building and chemicals. The average foreign investment size through the first 10 months of 1996 was $3.03 million, compared with $2.7 million in the same period in 1995. Since 1979, there have been 281,300 overseas-funded projects in China, with a total actual investment of $172 billion. Foreign investors in China include 200 of the Fortune 500.
China Daily (PRC), 12/27/96
Investment Figures Will Reach $40 Billion in 1996
Although there is a drop in the number of approved overseas-funded projects in China for 1996, foreign investment figures are expected to reach record high of $40 billion. Official sources said that even though approved projects were 20 percent less, this investment represents a 16 percent rise over 1995. The majority of the transnational firms who have recently entered China are from the U.S., Japan and EU member countries, and over 200 of the top U.S. Fortune 500 companies have helped fund projects in China. The projects these firms are involved in mostly cover infrastructure facilities and sectors producing machines, chemicals and raw materials.
Xinhua News Agency (PRC), 12/25/96
Shandong Leads Country in Chemical Sector
Last year, the chemical industry of Shandong Province led China, generating $3.37 billion in output value, a rise of 12 percent over 1995. It is expected that the industry will bring in over $3.6 billion in sales and close to $397 million in pretax profits for the whole of 1996. This is a 10 percent and 15 percent rise over 1995 respectively.
Xinhua News Agency (PRC), 01/11/97
Thirteen Categories of Products Banned from Private Sector
The State Administration for Industry and Commerce has recently banned 13 areas of trade and products from the private sector. The areas include financial business; military products; dangerous chemicals production; precious minerals mining; heavily polluting production projects and products listed for elimination; toxic and radioactive drugs; civil explosives; electric shock pistols and hunting guns; cigarettes and tobacco products (not including retail); superstitious products and imported garments.
China Economic Information (PRC), 01/16/97
China to Do Away With Chemical Fertilizer Subsidies
In order to create an environment of "equal" competition for competition in domestic fertilizer enterprises, China will dismantle chemical fertilizer import subsidies sometime in the near future. The fertilizers imported will be contingent upon the demand for agricultural production. The new regulations will also put emphasis on strengthening the administration of chemical fertilizer import quotas, banning anyone from scalping quotas.
China Economic Information (PRC), 01/23/97
China's Environmental Framework Means New Burdens on Foreign Companies
As a result of China's rapid economic growth, the challenge of juggling the tradeoffs between industrial development and environmental protection is monumental. The leadership of China has made concerted efforts in the past few years to create a regulatory regime to help minimize environmental degradation. These recent developments are bringing China closer in line with Western environmental control systems, similar to the path taken in the U.S. Because of this, the U.S. and other foreign companies operating in China may be surprised by their new obligations, but at the same time could mean more business opportunities for environment-related firms. The newly amended law and air emission standards could help create a market for foreign-made stack emissions monitoring equipment and emissions control technologies. Although targets are not now stringently enforced, the increased political support for the implementing of environmental protection measures may encourage industries in China to add or update the emissions equipment. As for solid waste, the implementing regulations of the Solid Waste Law, which should be released in early 1997, will mean an increased regulatory burden for foreign firms. Those firms processing chemicals and metals, or other waste generating industries, may be especially affected. This law will leave many foreign firms somewhat unsure of their current and future cost obligations for waste disposal. A change that took place in April 1996 is that the NPC amended China's Criminal Law to make "jeopardizing the environment" a criminal offence. This will raise the significance of environmental issues and will probably bring about greater compliance. This could be a shrill for foreign investors however as many perceive that China's enforcement of environmental regulations is unequal because foreigners have more resources and experience. There will be more stringent requirements and tougher penalties for noncompliance in the next few years. Although this may place additional regulatory burdens on foreign manufacturing companies in China, they will also contribute to a higher degree of transparency and open new opportunities for new players to capitalize on the changes.
The China Business Review (U.S.), 01/01/97
Imports of Phosphate Cause Glut in Fertilizer
The Ministry of Chemical Industry's deputy director, Zhou Banxue, said that China's chemical fertilizer producers had great difficulties last year because of the phosphate glut. The surplus of chemical fertilizer was estimated at 6 million tons, a record. Zhou said that this was due to the 9 million ton flood of imported fertilizer. China's production cannot satisfy demand but "Nine million tons (of imported fertilizer) is too much." It will now be necessary to only import 5 million tons annually, he said. China is the second largest producer of fertilizer and the largest consumer.
China Daily Business Weekly (PRC), 01/26/97
Imports to Boost China's Petrochemical Industry
In order to boost the development of its petrochemical industry, China will introduce $430 million worth of technology and equipment for the manufacture of ertalyte (a chemical for fiber production), from the United States, Japan and Germany. Contracts were signed with several foreign firms yesterday. By 2000, China will be capable of producing 2.6 million tons of ertalyte annually.
China Daily (PRC), 01/31/97
State Investment in Key Sectors During Ninth FYP
Key sectors such as agriculture, light industries, pillar industries, basic industrial construction and the tertiary industry will be listed as preferential sectors in China's Ninth Five Year Plan (1996-2000), according to Chen Jinhua, head of China's State Planning Commission. State investment will reach $1.08 trillion with $614 billion going to the national seven key sectors. The state will increase investment in agriculture in the construction of water conservancy facilities, develop agricultural technology, develop the national fertilizer industry and upgrade the forestry industry. The investment scale for agriculture will be $34 billion, $24 billion of which will go towards water conservancy. In the energy industry, emphasis will be placed on the utilization of electricity and coal. State investment will increase to $241 billion, equal to the total investment of the previous decade. The country's transportation capacity will be improved significantly over the period. Communications will also be improved. The state will invest $137 billion in the development of these two sectors. The investment scale for the petrochemical, automobile, electronic and machinery industries will reach $55 billion, $33 billion, $54 billion and $60 billion respectively.
China Business and Investment (PRC), 02/01/97
Analysts Urge Curbs on Fiber Imports
In a desire to protect domestic fiber-makers, industry analysts are urging China to curb imports of chemical fiber raw materials. The slowing of exports and large imports of cheap polyester filaments have made the industry take in big losses since 1995. Domestic firms' market share continues to decrease with around 60 percent of the market in 1995 from 87 percent in 1990. Analysts believe the chemical industry is currently suffering from an over reliance on imports. The cut in import tariffs last year has spurred imports and intensified competition.
Economic Information Daily (PRC), 02/18/97
Foreign Investment in China's Chemical Sector
As there is not much land allocated for non-agricultural use in China, it cannot produce many natural products and must depend more on synthetic substitutes. Demand for plastics, artificial fibers, pesticides, artificial rubber, herbicides and fertilizers has grown dramatically as a result. The 1995 trade figures for chemicals in 1995 was about $27 billion, with $6 billion more in imports than exports. Opportunities for foreign companies to make direct investments in the sector have been abundant, according to EIU's Multinational Companies in China. The Ministry of Chemical Industry said they would like to see the current foreign investment of $5.1 billion double by the year 2000. All companies that intend to invest more than $30 million need central government approval whereas projects under $30 million do not as they are handled at local levels. Many companies have chosen the later as the large investments can drag on for years. Recently, multinational companies have also been very concerned about the limited intellectual property rights protection they receive as there is widespread infringement. The WTO is also a cause for worry. At first, many foreign chemical firms invested in China because high import tariffs for capital equipment makes domestic production attractive. If China enters the WTO, these foreign firms worry that tariffs could fall too quickly making less efficient investments just as profitable. Investing in China's chemical sector has now become difficult and costly as last years dropping of the exemption from import duty on capital equipment has increased the cost of a typical chemical venture by 25 percent.
EIU Electronic (U.K.), 03/04/97
Boost for China's Chemical Industry
A Chinese official report said that in order to meet the demand for industrial chemical products, China will spend $31.3 billion in the development of 470 large and medium-sized chemical projects. Gu Xiulian, minister of the Chemicals Industry said that 400 of the projects would be launched by 2000.
South China Morning Post (Hong Kong), 04/09/97