China Market Insider Five Industry Clusters: China Wants to Concentrate its Petrochemical Industry

From Henrik Bork* |

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China wants to accelerate the concentration of its petrochemical industry into five industrial clusters. The ‘big five’ are listed in the People's Republic's just published new five-year plan. The China Market Insider Report presents them in detail.

With the ‘China Market Insider’ format, PROCESS reports regularly on the Chinese chemical and pharmaceutical market.
With the ‘China Market Insider’ format, PROCESS reports regularly on the Chinese chemical and pharmaceutical market.
(Source: © sezerozger -

Beijing/China – Central planners in Beijing are concerned with economies of scale and exploiting synergies in the expansion of petrochemical clusters and reducing environmental risks. Smaller chemical plants will have to move to chemical parks in the clusters, where laws will be more strictly monitored.

In addition to the goal of modernizing China's chemical industry, numerous serious incidents had set this project of geographic concentration in motion several years ago. A recent example is a massive explosion at a chemical fertilizer factory in Xiangshui in the coastal province of Jiangsu on March 21, 2019, which claimed the lives of 78 people.

The result of many such accidents, according to a report in the chemical newspaper Zhongguo Huagong Xinxi Zhoukan, has been "strict inspections and rectifications," as well as a "significant reduction of chemical parks" in China while "upgrading" those that remain.

This process will take a long time, and right now, chemical production in China is still very much scattered on the map. 676 large chemical parks throughout the People's Republic - for the petrochemical industry alone - are currently counted by the China Petroleum and Chemical Industry Federation. Soon, however, petrochemicals in China will only take place on a large scale in a few well-managed chemical parks. From now on, major investments will be approved mainly in the five large clusters.

The Five Largest Clusters of China's Petrochemical Industry

Cluster number 1: The Bay of Hangzhou

One of the most modern, integrated industrial clusters in China's petrochemical industry has emerged around this sea bay located south of Shanghai, where the Qiantang River flows into the East China Sea near Hangzhou.

Not only sites located directly on the bay, but also those on the lower reaches of the Yangtze River near Nanking (see 1c below) are included in this new cluster. Sometimes, therefore, the term ‘Hangzhou Bay and Yangtze River Delta Cluster’ is used.

Within a radius of many hundreds of kilometers, several members of the ‘100-billion-yuan club’ are located here, i.e., chemical parks and development zones that each generates more than 15.4 billion dollars (100 billion yuan) in revenue per year. The three most important - but by no means all - of these are called:

1a) The Shanghai Chemical Industry Park

The ‘Shanghai Chemical Industry Park,’ as it is called in English, is located on the northern shore of Hangzhou Bay and has a planned total area of 29.4 sq kilometers. Its proximity to the Yangtze River estuary delta is considered as an additional location advantage. Modern petrochemicals from oil and natural gas, fine chemicals, production of new synthetic materials, ethylene, isocyanate, and polycarbonate are local focal points.

Multinational chemical companies such as BASF, Covestro, Dupont, and Mitsui Chemicals have set up plants here, as have the Chinese companies Sinopec, Huayi Group, and Shanghai Gaoqiao Petroleum Chemical Company.

The five largest petrochemical clusters in China along with the Top 10 chemical parks in China 2020.
The five largest petrochemical clusters in China along with the Top 10 chemical parks in China 2020.
(Source: China Petroleum and Chemical Industry Association)

1b) The Ningbo Petrochemical, Economic and Technological Development Zone

Established in 1998, this chemical park is located at the southern end of Hangzhou Bay and is expected to cover a total of 40 sq kilometers when completed. It is one of the three largest chemical parks in China.

Among others, the refinery ‘Zhenhai Refining & Chemical’ with an annual capacity of 23 million tons of crude oil and annual ethylene production of one million tons is located here, as well as Zhongjin Petrochemical with its annual production of two million tons of aromatics, and Ningbo ZRCC Lyondell Chemical, which produces 600,000 tons of styrene here annually.

1c) Nanjing-Jiangbei Technology Park for New Materials

Founded in 2001, this modern chemical industrial park is not located directly on the bay but near the eight-million-strong city of Nanking on the lower reaches of the Yangtze River. It is included here because China's industrial planners have begun to build a new ‘megacity cluster’ with a sea bridge across the Bay of Hangzhou and high-speed train lines that will merge the traditional chemical industry strongholds in Shanghai and the neighboring provinces of Zhejiang and Jiangsu into a single powerhouse, all under the label ‘Bay of Hangzhou.’

New polyurethane materials, high-performance polymer materials, synthetic rubber, and a large number of specialty chemical products will be produced here. This park, just like the two described above, is also a member of the ‘100-billion-yuan club’. Among others, the companies Sasol, Eastman, Celanese, Heraeus well as BASF are represented with production facilities.

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