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China's petrochemical industry will maintain robust growth of at least 15 percent this year, according to Tan Zhuzhou, chairman of the China Petroleum and Chemical Industry Association (CPCIA).
The sector's development strategy for this year focuses on industrial restructuring, energy conservation and trade friction reduction.
"The soaring demands for petrochemical products on both the domestic and international markets will fuel the further expansion of the country's petrochemical industry, after an all-time high of industry sales revenue and profits in China last year," Tan told China Daily in an interview.
According to industry sources, China's petrochemical industry collected revenue of 24.2 trillion yuan (US$2.9 trillion) in 2004, up 32.5 percent year-on-year, and the sector's profits skyrocketed by 58.7 percent to top 2.8 trillion yuan (US$337 billion). These figures stand at almost twice the average level of industrial growth in the country.
Tan attributed the petrochemical industry's stunning performance last year to China's fast-growing economy, the heavy fixed assets investment in the sector, and the high oil price on the international market.
"The (petrochemical) sector in China still has great potential to boom in the coming years, as the sector's production falls short of demand," Tan said, adding that the petrochemicals market in the country's vast rural areas is far from fully developed.
The projected fast growth of China's petrochemical-related sectors including automobiles, electronics, textiles and property in 2005 - the major contributors to the estimated 8 percent gross domestic product increase - will further boost the ravenous domestic demand for petrochemical products, analysts say.
The continued high oil price on the international market is also conducive to the growth of China's oil and gas upstream sectors.
"Fueled by the growing international petrochemical market, China's petrochemical trade volume will maintain a double-digit increase," Tan told a recent petrochemical conference held in Beijing.
The country reported a petrochemical trade volume of US$158.6 billion last year, up 40 percent from 2003.
Despite the fast growth, Tan pointed out, there are still some obstacles to be removed in order to keep growth rational and sustained.
The economic growth pattern since the opening-up and reform of the 1980s has resulted in industrial structure imbalances in the petrochemical sector, which are now a major bottleneck to the sector's further growth.
In an effort to stabilize production and advance the industry's competitiveness on the global stage, the government has drawn up a host of measures to optimize the industrial structure of China's petrochemical sector.
These measures aim to improve the production of agriculture-use petrochemicals, diversify products to reduce dependency on exports, and encourage the growth of traditional petrochemical sectors such as rubber products and dyestuff, as well as to promote investment in advanced technologies in eastern areas and make the most of the rich energy resources in the west.
Petrochemical production consumes a lot of energy and causes heavy environmental pollution, so posing a threat to the sustainability of economic growth.
Statistics from the CPCIA show energy consumption in the petrochemical sector accounts for about 40 percent of the country's total, and the sector's energy consumption per unit produced is 4.1 times higher than in the United States and Canada.
Tan suggested the government adopt measures such as tax reduction to encourage energy conservation.
More investment in technical research should also be part of the government's budget to promote technology upgrading and reduce the cost of petrochemical production, he added.
(China Daily April 8, 2005)
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