Li Yongwu: Overinvestment leads to overcapacity crisis

This year, China's petroleum and chemical industries have achieved better than expected results. However, the problem of excessive investment in fixed assets and declining industrial efficiency during the economic operation is very prominent. Li Yongwu, president of the China Petroleum and Chemical Industry Association pointed out that the fixed asset investment in the petrochemical industry is still too fast. If this trend continues to increase, it may lead to a crisis of overcapacity. In 2007, three effective measures must be taken to resolve the fixed assets investment in the petrochemical industry. Wait for outstanding problems.
The outstanding performance of the industry Li Yongwu stated that China's petroleum and chemical industries have performed well in the first year of the “11th Five-Year Plan” period, the economic benefits have improved steadily, the structural adjustment has achieved substantial results, breakthroughs have been made in independent innovation, resource conservation has achieved initial results, and safety and environmental protection efforts have been achieved. Increased, but the problems in the operation of the industry are also very prominent.
First, investment in fixed assets is still too fast.
In recent years, due to the improvement of the entire industry's efficiency, the entire industry has set off a climax of capacity expansion. Especially in areas with energy and resources in the central and western regions, planning and construction of large-scale coal chemical bases are relatively large. Projects are similar, resulting in excessive pressure on water resources and the environment. Investment in some industries is overheated. If this trend continues to increase, it may lead to a crisis of overcapacity. The surge in chemical investment will also make it difficult to complete energy consumption indicators. The direct consequence of capacity expansion in the chemical industry is that the industry's efficiency is falling.
It is understood that the provinces of petroleum and chemical industries such as Shandong, Henan, Liaoning, Zhejiang, and Tianjin have increased their fixed asset investment by more than 30% this year, especially in Inner Mongolia, Jiangxi, Shanxi, and Chongqing, and their fixed asset investment growth has increased by 97.6 percent respectively. %, 87.5%, 80% and 66.2%. The second is the declining trend of industry profits.
Li Yongwu introduced that in the first eight months of this year, international crude oil prices have been oscillating at a high level, which has increased the cost of downstream products such as organic chemical products, organic intermediates, and synthetic materials. In the second half of the year, the nation’s electricity price will increase, which will have a greater impact on the high-energy-consuming petroleum and chemical industries, especially nitrogen fertilizer, calcium carbide, yellow phosphorus, and caustic soda.
The third is the pressure on energy conservation and environmental protection.
The chemical industry is a high-energy-consuming industry, with small enterprises accounting for 96%, small scale of production, backward technology, and pressure for energy conservation. In the first half of this year, total pollutant emissions and energy consumption per unit of GDP have gone up. The results of two large environmental risk investigations showed that 81.5% of the 7,555 petroleum and chemical projects were located in environmentally sensitive areas such as river basins and densely populated areas, of which 45% were major sources of risk. In the “Eleventh Five-Year Plan” period, the oil and chemical industry must reduce pollution emissions by 10%, and the pressure for emission reductions in 2007 is very high.
According to statistics from the China Petroleum and Chemical Industry Association, in the first 10 months of this year, the main business income of the oil and chemical industry was about 3.43 trillion yuan, an increase of 29% year-on-year. It is estimated that the main business income of the whole industry will reach about 4.1 trillion yuan in 2006, an increase of 25% year-on-year; the profit will be about 435 billion yuan, a year-on-year increase of 17.3%. The market price of petrochemical products showed a trend of rising and falling, and oscillations were rising. The price of 155 key chemical products increased by 51% year-on-year, accounting for 34.2%. The import and export trade of petrochemical products grew steadily, totaling 87.75 billion U.S. dollars from January to September, an increase of 32.7% year-on-year. With the expansion of domestic production capacity, the domestic sales pressure has been increasing, and the export momentum has been relatively strong. However, most of the export products are major road goods. The added value is low, the unit price has declined, and the export structure is not very reasonable.
It is necessary to change the mode of extensive growth as soon as possible Li Yongwu believes that effective measures must be taken in 2007 to resolve outstanding problems in the operation of the petrochemical industry.
First, adjust the economic structure and effectively change the mode of growth.
The total discharge of pollutants and energy consumption per unit of GDP have risen. The reason is that the economic structure has not yet fundamentally changed and the impulse for extensive development has not been fundamentally contained. In 2007, it is necessary to resolutely curb the blind investment of some industries, the construction of low-level redundant projects, and strict restrictions on high-energy-consuming, high-pollution projects and backward technology. Encourage the development of products with high technological content, high added value, and low resource consumption and environmental pollution. By extending the industrial chain, we will increase the depth of processing and refinement of products and expand the proportion of high-end products.
Second, strengthen industry technology innovation and speed up the transformation of scientific and technological achievements.
In 2007, it is necessary to promote the upgrading of industrial structure, prominent recycling economy, and energy conservation and consumption reduction, build a research and innovation system combining production, education and research, strengthen key scientific and technological research, speed up the transformation of achievements, and optimize the innovative service system to realize the petroleum and chemical industry. Continuous development provides technical support.
Third, strengthen resource conservation and environmental protection and safety, and vigorously develop a circular economy.
Proposed Renewable Energy Support Measures At present, China's energy substitution and renewable energy industries are developing rapidly. Li Yongwu recommends that the government introduce supporting measures as soon as possible to regulate industrial development and market behavior. Its supporting measures include: Formulating the corresponding products, technologies, and safety standards for methanol gasoline. The enthusiasm for the proposed fuel ethanol project is very high. The industry is faced with many problems such as the development of non-food materials, raising the industry level, and improving the environment. It is necessary to formulate industrial development policies, regulate market order and investment behavior, and prevent blind construction and investment waste. It will guide the source of raw materials and process routes of biodiesel, speed up the formulation of national standards, and provide the same tax concessions for biodiesel and ethanol, and should consider early access to the oil market. Dimethyl ether is actively promoted as a civilian fuel, and the corresponding industry and national standards are formulated.

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