Expert Perspectives | Emerging Trends in Foreign Investment Layout in the Petrochemical Industry and New Pathways for Deepening Joint Ventures and Cooperation

Pang Guanglian Director-General and Secretary-General of the Foreign Investment Committee, China Petroleum and Chemical Industry Federation (CPCIF) Secretary-General of the International Capacity Cooperation Alliance Abstract Leveraging institutional openness dividends and China’s comprehensive, end-to-end industrial chain advantages, global petrochemical giants have undergone a fundamental shift in their investment logic, focus areas, collaboration models, and regional deployment strategies in China. In alignment with the national '15th Five-Year Plan' strategy for two-way opening-up—and grounded in the new policy environment for attracting foreign investment—domestic petrochemical enterprises can harness foreign capital more effectively across four key dimensions, foster collaborative ecosystems, and elevate the quality of joint ventures and cooperative partnerships. General Secretary Xi Jinping stated: “China’s door to the world will only open wider.” This top-level guidance anchors the fundamental direction of China’s opening-up in the new era and serves as the overarching principle for the petrochemical industry’s coordinated planning of both ‘bringing in’ and ‘going out’ initiatives. Over more than four decades of progressive opening-up, China’s policies for attracting foreign investment have evolved historically—from an early stage of coarse-grained, preferential招商 relying on tax incentives and partial market access, toward a rule-based, institutional, and full-chain model of openness governed by law and regulations. As a pillar industry of the national economy, the petrochemical sector ranks among the largest manufacturing sectors in terms of foreign investment absorption and depth of openness. According to authoritative estimates from the Ministry of Commerce and the CPCIF, as of May, the total stock of foreign direct investment (FDI) across the entire petrochemical industry nationwide stands at approximately USD 360 billion (RMB 2.556 trillion); FDI in manufacturing accounts for about 30% of China’s national FDI total. Cumulative pure foreign investment across the integrated petrochemical and oil & gas industry chain totals roughly RMB 1.85 trillion—7.2% of China’s total foreign investment stock and 26.4% of manufacturing FDI—with RMB 1.58 trillion invested specifically in refining and chemical production. These figures robustly attest to global capital’s long-term confidence in China’s comprehensive petrochemical industrial chain, its massive domestic market demand, and its institutional business environment. Currently, persistent geopolitical conflicts continue to disrupt international energy and chemical supply chains, while the dual-carbon transition accelerates domestic industrial restructuring. Landmark wholly foreign-owned or majority-controlled refining and chemical projects—including BASF’s Zhanjiang complex, ExxonMobil’s Huizhou project, and Saudi Aramco’s Panjin facility—are being rapidly implemented. Foreign investors are shifting from mere product localization toward localized R&D and deep integration into the industrial chain. Against the backdrop of the ‘15th Five-Year Plan’, which comprehensively advances two-way opening-up and aims to build China into a pivotal hub for dual-circulation development, systematically reviewing the evolution of petrochemical industry investment-attracting policies and analyzing the characteristics of foreign capital in this new phase is critically important—for enhancing the quality of joint ventures and cooperation, and for leveraging foreign investment to empower high-end, green, and intelligent transformation of the industry. #1 Evolution of Petrochemical Industry ‘Bringing-In’ Policies: Synchronized with Industrial Growth China’s petrochemical industry investment-attracting policies have consistently aligned with the national rhythm of opening-up and matched the industry’s own growth trajectory—from weakness to strength—dividing broadly into four stages: breaking the ice and filling gaps, scaling up capacity, improving quality and efficiency, and institutional openness. Stage 1: Breaking the Ice and Filling Gaps (Reform and Opening-Up Era–2001): Pilot-based, inclusive investment attraction to address industrial deficiencies. In the early reform period, China’s domestic petrochemical industry suffered from weak foundations and dual shortages of capital and technology; its core task was to fill capacity gaps in general-purpose raw materials. The state piloted openness first in special economic zones and coastal open cities, offering inclusive preferential policies—including income tax reductions and low-cost land—to attract foreign investment. Market access rules were relaxed, and equity restrictions minimal. Shell, BASF, and Dow Chemical were among the first to enter China via joint ventures or cooperative projects in basic resins and general-purpose chemical raw materials, introducing complete sets of foreign equipment and processes to fill critical domestic capacity voids. Policy features of this stage included regional pilot programs, emphasis on quantity over quality, and relatively weak industrial guidance. Foreign-invested projects were scattered along coastal regions, laying the foundational groundwork for modern China’s petrochemical industry.

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