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2: The Petrochemical Cluster ‘Pan-Greater Bay Area’

One epicenter of this new industrial cluster is around Daya Bay on the South China Sea. Here in the south of Guangong Province, east of Hong Kong, there were once pirates and gray whales. Today, it is home not only to six nuclear power plants but also to some of the largest affiliated sites in China's petrochemical industry.

Another local epicenter of the cluster is not east of Hong Kong but more than 400 kilometers west of it near the port city of Zhanjiang on the Leizhou Peninsula. In between lies the ‘Greater Bay Area’ around Hong Kong, Guangzhou, and Shenzhen on the Pearl River estuary delta, and this is where the ‘Pan-Greater Bay Area’ name for this industry cluster comes from.

Two of the major chemical parks in the cluster are:

2a) Huizhou-Daya Bay Economic and Technological Development Zone

Here, the Chinese State Council decided to build a ‘world-class petrochemical industrial base’ in 1993. The geographical location is favorable, not only because of the deep seaports but also the proximity to the sales markets in South China and Southeast Asia. Hong Kong is only 47 nautical miles away, and by truck, it is 120 kilometers to Dongguan, a hotspot of the Chinese manufacturing industry.

A total of 91 chemical projects with a total investment of about 35.5 billion dollars (230 billion yuan) have been located here so far, including the CNOOC Huizhou Petrochemical refinery or Shell Huizhou's ethylene production. The ‘Exxon Mobil Huizhou Project’ is the first petrochemical production plant in China to be wholly owned by a U.S. corporation. Among other things, Exxon Mobil is building an ethylene cracker here with a capacity of 1.6 million tons per year.

2b) The Zhanjiang-Maoming petrochemical base

Here, among many other major chemical companies, BASF is investing in a modern Verbund site that no longer has to be run as a joint venture with Chinese state-owned companies, as was previously the case, but may be owned by the Germans alone. (We reported this several times, most recently here: BASF is Working on the ‘Green’ Verbund Site in China).

BASF plans to invest around ten billion dollars or the equivalent of 10.12 billion dollars here by 2030. The first phase of the project, scheduled to come on stream in 2022, will produce engineering plastics and thermoplastic polyurethane.

3: The Petrochemical Industry Cluster on Bohai Bay

The giant sea bay of Bohai is located in Shandong Province on the Yellow Sea in northeast China, near the port city of Tianjin. More than 60 small and medium-sized chemical factories are popularly referred to as the ‘teapots’ of China's chemical industry.

However, the bay only provides its name here, for the naming of the ‘Bohai Bay Rim Petrochemical Industry Cluster,’ which, in addition to the direct coastline on the bay, also includes the industrial zones on the Liaoning peninsula, in the entire Shandong province and the new ‘Jing-Jin-Ji’ megacity cluster, i.e., in the Beijing-Tianjin-Hebei region. China's Communist Party has always been very good at marketing existing ‘assets’ under new brand names.

To this end, the central government in nearby Beijing and the provincial government of Shandong have decided to develop the four towns of Dongying, Yantai, Binzhou, and Weifang with nine other chemical parks on the edge of the bay into a new cluster of the modern petrochemical industry.

A flagship project is the Yulong petrochemical complex near Longkou in southern Bohai Bay, approved directly by the top planning commission, NDRC, last June. The Nanshan Group and several other investors are building a new ethylene plant here at the equivalent of 21.3 billion dollars, which is expected to produce three million tons from 2024.

Another industrial park in this cluster, and one of the largest, is the Dongyin Port Economic Development Zone. Around 50 kilometers north of the mouth of the Yellow River, a modern logistics hub is being built here alongside chemical plants.

4: The Haixi Petrochemical Cluster

Fujian Province in southeast China, directly opposite Taiwan, decided back in 2000 to develop petrochemicals as one of three key industries. ‘Haixi’ refers to the Fujian coast.

The two largest petrochemical industrial parks in Fujian are located in Meizhou Bay and Gulei:

4a) Meizhou Bay Petrochemical Base

Meizhou Bay, located on the Taiwan Strait about halfway between the provincial capital of Fuzhou and the tourist resort of Xiamen, was ‘one of the greatest ports in the world’ even during the days of Marco Polo.

The central planners in Beijing now want to gradually form a ‘petrochemical industrial belt’ from the surrounding regions, which need not fear comparisons with the Bay of Mexico or the Bay of Tokyo. The three largest chemical parks on Meizhou Bay are called Quangang, Quanhui, and Dongwu.

4b) The Gulei Petrochemical Base

Many residents of the Gulei Peninsula, which juts into the Taiwan Strait south of Xiamen, were relocated in 2017 to prepare the entire peninsula for petrochemicals. Protests erupted, but Beijing was not dissuaded from its plans.

Fujian Petrochemical and Saudi Arabian chemical company Sabic announced in September 2020 that they would jointly invest in an ethylene plant in Gulei with an annual capacity of 1.5 million tons. (We reported this: Sabic and Fujian to Build World’s Largest Ethylene Plant).

5: The ‘Golden Energy Triangle’ – an industrial cluster for coal chemistry

Despite its ambitious plans announced last year in climate protection and the reduction of emissions necessary for this, China continues to hold on to coal chemistry. The golden energy triangle refers to the three sites that have been combined into a cluster: Yulin in Shanxi Province, Ningdong in Ningxia Province, and Ordos in Inner Mongolia Province, i.e., a kind of supraregional industrial area for coal chemistry in northwest China.

Around 200 billion tons of coal are stored in this triangle, which corresponds to about 47.2 per cent of China's total reserves. There are also good conditions there for the generation of solar and wind energy, which Beijing plans to use to make some of its coal chemical projects more environmentally friendly over the coming years. For example, the sun shines for 3,000 hours a year.

That's why the ‘Ningdong Energy Chemical Base,’ one of the triangle's three main chemical parks, has already begun producing green hydrogen using renewable energy. Hydrogen production there is to be ramped up to 200,000 metric tons by 2025, which is why Beijing is already calling its industrial cluster an example of ‘modern coal chemistry.’

* Henrik Bork, former China correspondent of the German Süddeutsche Zeitung and the Frankfurter Rundschau, is Managing Director at Asia Waypoint, a Beijing-based consulting agency. ‘China Market Insider’ is a joint project of the Vogel Communications Group, Würzburg, and Jigong Vogel Media Advertising in Beijing.

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