BLOG: China petchem project cancellations on “common prosperity” may not mean higher imports

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson.

Please avoid fitting old ideas about how China works onto an entirely new development model. . One example is the idea out there that China’s petrochemical imports may increase.

Yes, petrochemical projects may not be cancelled because reducing CO2 emissions is a key element of the “common prosperity” policy pivot.

But, as the chart in today’s blog post illustrates using PP as an example, the policy shift means demand growth could be a lot lower. This may more than cancel out any benefit to exporters

The future is bright, though for the overseas petrochemical producers that get with the China programme – for instance, BASF with its Zhanjiang project in south China that could deliver 60% lower CO2 emissions than a gas-based petrochemical facility of a similar scope.

China may end up leading the world in retrofitting old plants with blue and green hydrogen, electric furnace and other CO2 mitigation technologies, while also building many more new plants that use the technologies.

And don’t be surprised if China introduces a carbon border adjustment mechanism similar to the one being planned by the EU, to protect its local produces from competition from importers who are not forced to reduce their carbon output.

The implications of “common prosperity” are nothing short of huge. They likely represent the biggest event in the  global economy – and therefore our industry – since 2009 or possibly even earlier.

Editor’s note: This blog post is an opinion piece. The views expressed are those of the author, and do not necessarily represent those of ICIS.