Insights into the Current State and Trends of China’s Pesticide Industry: Focusing on Import‑Export Trade and Industrial Relocation to Unlock Historic Opportunities

Since the launch of reform and opening-up, China’s agrochemical industry has advanced in tandem with the modernization of agriculture, achieving substantial progress and emerging as a major global producer and exporter of pesticides. However, a number of challenges have also become increasingly apparent, including the sector’s large scale but limited competitiveness, outdated production technologies, and insufficient innovation. In recent years, stringent environmental regulations, the ongoing push to relocate chemical enterprises into industrial parks, and a wave of mergers and restructurings have placed the agrochemical industry at a critical juncture—navigating steep challenges while pursuing transformation and upgrading.

In 2020, a severe locust plague in East Africa, the global spread of COVID‑19 restricting import and export trade, and an escalating global food crisis all took their toll on various sectors. For the agrochemical industry, which relies on export markets to absorb domestic production capacity, what changes and trends can we expect?

At the “2020 China Agrochemical International Market Development Conference,” hosted by AgroPages World Agrochemical Network in Hangzhou on August 27–28, 2020, Wu Houbin, Director of the Pesticide Inspection Institute of the Ministry of Agriculture and Rural Affairs; Yang Guangliang, a professor‑level senior engineer at the Petroleum and Chemical Industry Planning Institute; and Wu Di, Manager of the Research Department at CICC, offered insights into the development trajectory, current status, and future trends of China’s agrochemical industry from multiple perspectives, including import‑export trade, chemical industrial parks, agrochemical production and sales, and listed companies. In this article, we have excerpted selected data and viewpoints from these expert presentations, with the hope of providing useful reference for interested readers.

In the first half of 2020, China’s pesticide exports grew against the trend, with glyphosate playing a particularly prominent driving role.

Overall, in the first half of 2020, the growth rate of total imports and exports was 2.5%, higher than the 2.4% recorded during the same period last year. In the first half of 2020, exports totaled US$4.46 billion, up 4.1% year on year, while imports amounted to US$237 million, down 21% compared with the same period last year. The trade surplus continued to expand. In the first half of 2020, export volume reached 900,000 tons, a year-on-year increase of 15.3%, with the rise in volume being even more pronounced (Table 1).

By product category, herbicides were the largest segment of pesticide exports in the first half of 2020, with export value reaching US$2.288 billion, continuing to account for roughly half of total pesticide exports, though their share declined slightly compared with the previous year. Insecticide exports totaled US$1.427 billion, up 2.1% year over year, while fungicide exports reached US$646 million, an increase of 10.2% over the same period.

Looking at pesticide active ingredients and formulations exported, the pattern of export value and volume being dominated by active ingredients has remained unchanged. However, influenced by the pesticide export tax rebate policy, the share of active‑ingredient exports in total export value has declined, while the share of formulated product exports has risen; moreover, the growth rate of active‑ingredient exports has been lower than that of formulated products (Table 2).

In June 2020, the Ministry of Agriculture and Rural Affairs introduced an export‑only registration system to facilitate Chinese pesticide manufacturers and boost export trade. It should be noted that applications must pertain to products that have already obtained pesticide registration or an import authorization from the importing country (or region), and only domestic pesticide producers are eligible to apply for export‑only pesticide registration.

In addition, to prevent pesticides intended solely for export from being sold domestically, enterprises are required to submit a corporate commitment letter when applying for registration. Upon export, the Ministry of Agriculture and Rural Affairs will review and verify the registration certificate and issue an export notification; customs will release the shipment upon presentation of this notification. Meanwhile, to facilitate market supervision, pesticides restricted to export are assigned distinct identification numbers—using the EX code series and marked “For Export Only”—to support traceability, management, and law enforcement. Any violations involving domestic sales will be rigorously investigated and prosecuted in accordance with the relevant provisions of the Regulations on the Administration of Pesticides regarding the failure to obtain domestic-use registration.

Environmental remediation is driving the pesticide industry to concentrate in regions such as Inner Mongolia and Ningxia.

According to statistics from the Park Committee of the China Petroleum and Chemical Industry Federation, as of the end of 2018, there were a total of 676 industrial parks nationwide with petroleum and chemical industries as their dominant sectors. Among these, 57 were national-level chemical parks (including economic and technological development zones and high-tech zones), 351 were provincial-level chemical parks, and 268 were prefecture-level chemical parks. Fourteen super-large parks had an output value exceeding RMB 100 billion, 33 large parks ranged between RMB 50 billion and RMB 100 billion, 224 medium-sized parks fell between RMB 10 billion and RMB 50 billion, while the remaining 405 parks each recorded an output value below RMB 10 billion.

Over the past decade or so, the Ministry of Industry and Information Technology, along with provinces and municipalities including Jiangsu, Shandong, Hubei, Henan, and Liaoning, have all introduced a series of remediation and upgrading plans targeting chemical enterprises and chemical industrial parks. Jiangsu Province has undertaken the most stringent measures; beginning in 2007, it launched a comprehensive overhaul, and after 2020 issued the “Catalogue of Restrictions, Phasing-Out, and Prohibitions on the Adjustment of the Chemical Industry Structure in Jiangsu Province (2020 Edition)” (Document No. 32 [2020] of the Jiangsu Provincial Government Office). This catalogue explicitly prohibits the establishment of new chemical industrial parks and the approval of new chemical enterprises outside such parks, as well as the creation of additional production facilities for pesticide active ingredients (of the chemical synthesis type).

The ongoing environmental remediation efforts in Jiangsu, Shandong, Zhejiang, and other regions have prompted the agrochemical industry to relocate to areas with greater resource and environmental carrying capacity. Among these, the shifts in Zhejiang and Hebei have been particularly pronounced. The primary destinations for the relocation of agrochemicals and their intermediates are the northwest and central regions, led by the Inner Mongolia Autonomous Region and the Ningxia Hui Autonomous Region, followed by Gansu, Shaanxi, and Hubei provinces. Tables 5 and 6 present the newly added capacities for active ingredients and intermediates in various provinces, municipalities, and autonomous regions over the past two to three years; Inner Mongolia and Ningxia have recorded the largest increases. Specifically, Inner Mongolia has added approximately 93,880 tons of active ingredients and 361,600 tons of specialized intermediates, while Ningxia has added 132,000 tons of active ingredients and 100,200 tons of specialized intermediates. Hubei has increased its capacity by 27,400 tons of active ingredients and 141,530 tons of specialized intermediates.

The relocation of China’s agrochemical industry has followed a three‑phase trend: 2018–2019 marked a period of hasty offshoring; 2020–2022 saw previously hurriedly relocated projects coming online, entering trial production or full operation, while associated challenges gradually surfaced; and from 2023 to 2025, the sector is expected to return to a more rational trajectory, with ecologically fragile western provinces focusing on streamlining capacity, while eastern and central provinces and municipalities adopt a progressively more accommodating stance—though regulatory standards will inevitably tighten.

Pesticide production has been steadily declining over the past five years, and the industry’s level of concentration still has considerable room for further consolidation.

From 2016 to 2018, amid rising oil prices and supply-side reforms, the prices of agrochemical active ingredients experienced a significant upward cycle. As environmental and safety concerns were addressed and channel inventories were depleted, active‑ingredient prices entered a downward trajectory in the second half of 2018. Overall, herbicides, insecticides, and fungicides all followed a declining trend, with fungicides showing relatively stronger performance and insecticides recording the sharpest price declines.

Over the past five years, the scale of pesticide production has steadily contracted, signaling that the industry has entered a stock‑based market phase. At present, pesticide manufacturing remains concentrated in the eastern coastal regions, notably Jiangsu, Zhejiang, and Shandong (Figure 1). However, there has been a temporary shift toward inland areas; given the sector’s reliance on water resources such as rivers and seas, Wu Di argues that this trend is only temporary. Since the 1990s, China’s total pesticide usage had generally increased, but since 2014 it has declined year by year (Figure 2).

In terms of imports and exports, over the past decade China’s total pesticide imports have remained relatively stable, staying below 100,000 tons, with patented products accounting for the bulk of imports. Pesticide exports, since 2016, have generally hovered around 1.4 million tons, showing virtually no growth.

From the perspective of import and export prices, the average domestic import price for pesticides exceeds USD 8,000 per ton, suggesting that the bulk of imports consist of patented products. By contrast, export prices hover around USD 3,000 per ton, leading to the conclusion that exports are primarily concentrated in bulk commodities such as glyphosate.

The Chinese agrochemical industry is characterized by three major trends: First, consolidation is inevitable. By the end of 2018, China had 1,305 formulation companies, 75 active‑ingredient producers, and 630 companies engaged in both formulation and pesticide production. Drawing on international market experience, there remains significant room for further increases in industry concentration. Second, genetically modified (GM) crops in China present a historic opportunity: in the world’s five largest GM‑crop‑producing countries, the average adoption rate is already approaching saturation, whereas in China, GM acreage in 2018 stood at just 2.9 million hectares—roughly 4% of the U.S. level (75 million hectares). Third, the trade war is reshaping global agricultural trade: between 2017 and 2019, China’s share of soybean imports from the United States declined by 15%, signaling a shift in China’s trade patterns; such changes in crop‑trade dynamics could exert subtle but meaningful impacts on demand.

In the Chinese agrochemical sector, two trends are emerging: first, agrochemical companies will increasingly integrate into the global value chain; second, they will shift their focus from active‑ingredient production to innovative drug R&D and formulation manufacturing. Formulation development is already a strategic priority for most domestic firms, with building strong brands and expanding exports set to be the overarching direction going forward.

AgroPages World Agrochemical Network Exclusive article; please credit the copyright when reprinting!