Chemical industry in China(PDF 8

Chemicals industry at the crossroads. China is becoming an increasingly
important consumer and supplier of chemical products. Reasons: Strong demand
within the country and cost advantages over Western industrial countries both in
the production of chemical products and for key customer industries building up
production capacities.
Growth boom in China. DB Research expects chemicals turnover in China to
boom up to 2015. Sales should grow by 10% annually to nearly EUR 400 bn –
versus increases of merely 3.5% in the USA and 3% in Germany. With this growth,
China’s chemicals industry will increase its share of the world market from 8% to
13%. This would make China the second biggest producer after the USA as of
2015.
Major capacity build-up. Western multinationals and local Chinese companies
are currently setting up extensive production capacities in China. For example,
over 2 million tonnes of ethylene capacity are set to go onstream in 2005, and a
further nearly 4 million tonnes are likely to be added in 2006 (as a comparison:
German ethylene production in 2004: 5 million tonnes).
Direct investment plays a key role. The increase in capacity is mainly being
financed by direct investments as part of cooperative ventures with foreign
business partners.
Curbing factors. The growth of the chemicals industry in China is being
hampered because important underlying conditions are not in place. This holds for
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