The “northern relocation” of major industrial firms is still underway! The number of chemical enterprises in eastern coastal provinces such as Jiangsu, Shandong, and Zhejiang continues to decline.

The “northward relocation” of major industrial enterprises is a highly scrutinized issue in China’s industrial development, and the share of the chemical industry serves as one of the key indicators of economic growth. In recent years, driven by relocation and restructuring, a significant number of factories have gradually shifted their operations to new locations...

Jiangsu has fewer than 1,000 chemical enterprises! Has Shandong lost its title as the “leading chemical province”?

Since 2019, driven by economic development and shifts in industrial distribution, major chemical-producing provinces such as Jiangsu and Shandong have launched extensive remediation campaigns to relocate or phase out a large number of projects, resulting in substantial reductions in both chemical parks and enterprises.

After five years of initiatives to relocate, upgrade, and restructure chemical enterprises, Jiangsu had fewer than 1,000 chemical firms remaining as of 2022. Meanwhile, Shandong—long known as China’s “leading chemical province”—once had hazardous‑chemical production and trading companies in all 16 of its prefecture‑level cities, with more than 60,000 hazardous‑chemical transport vehicles on the province’s roads every day. Following five years of rectification, Shandong has reduced its chemical industrial parks from 199 to 84 and shut down over 2,000 non‑compliant chemical enterprises.

In eastern coastal provinces such as Jiangsu, Shandong, and Zhejiang, the number of chemical enterprises has plummeted, with many shifting to the central and western regions and Northeast China. Data show that since 2019, these areas have attracted as many as 632 newly relocated projects. With a large-scale relocation of chemical firms and projects, could Shandong’s position as a leading player in the sector be at risk?

Joint Statement by 17 Departments: Strict Prohibition of the Cross-Regional Relocation of Outdated Production Capacity

In August 2022, the Ministry of Ecology and Environment, together with 17 other departments and agencies, jointly issued the Action Plan for Winning the Tough Battle to Protect and Restore the Yangtze River. The plan mandates that all chemical industrial parks in the Yangtze Economic Belt complete their designation by the end of 2023, and that by the end of 2025, pollution sources from the chemical industry along the river be effectively controlled and comprehensively addressed. It also strictly prohibits the cross‑regional relocation of outdated chemical production capacity and calls for the relocation, upgrading, or closure of chemical enterprises located within one kilometer of the riverbank in key areas.

This plan covers the 11 provinces and municipalities along the Yangtze River Economic Belt, as well as the relevant county-level administrative areas in Qinghai Province, the Tibet Autonomous Region, Gansu Province, Shaanxi Province, Henan Province, and the Guangxi Zhuang Autonomous Region—regions that encompass the Yangtze River’s main stem, its tributaries, and its lakes.

The main contents are as follows:

1. Advance the management of pollutant discharge permits for enterprises in the chemical industry, strengthen oversight of chemical enterprises located outside industrial parks, and ensure compliance with emission standards.

2. Strengthen environmental risk prevention in the transport of hazardous chemicals by water, and severely crack down on illegal transportation of hazardous chemicals as well as the unlawful discharge of oily wastewater, chemical tank‑cleaning water, and other such effluents.

3. Deepen the investigation and remediation of “three‑phosphorus” pollution in the Yangtze River, strengthen regulatory oversight of key regions and priority industries, promote stable compliance with emission standards among phosphate rock and phosphate chemical enterprises, and enhance the comprehensive utilization of phosphogypsum. For provinces such as Hubei and Guizhou, where phosphate rock and phosphate fertilizer production are concentrated, establish even stricter total phosphorus discharge control requirements, with a particular focus on intensifying efforts to address phosphorus pollution in the Three Gorges Reservoir area and its upstream regions, the Hunan–Hubei sections of the Yangtze mainstream, the Tuojiang, Minjiang, Wujiang rivers, Taihu Lake, and the Danjiangkou Reservoir.

4. Launch a special campaign to clean up and address plastic waste floating on water surfaces, and strengthen management of areas where such debris accumulates, including the Three Gorges Dam. Intensify efforts to remove plastic waste along riverbanks, and strictly enforce regulations against illegal dumping of plastic waste on shorelines.

5. Conduct the delineation of key areas for groundwater pollution prevention and control; in conjunction with the overall spatial layout of chemical industrial parks within the river basin, identify priority areas for groundwater environmental risk management and control, and specify environmental regulatory requirements.

6. The cross‑regional relocation of outdated chemical production capacity is strictly prohibited. In accordance with relevant national and local regulations, efforts shall be made to relocate, upgrade, or shut down chemical enterprises located within 1 kilometer of riverbanks in key regions. Accelerate the relocation and upgrading of hazardous chemical producers in densely populated urban areas, optimize the spatial layout of chemical industrial parks, and guide relocated or upgraded enterprises to move into parks characterized by general or lower safety risks. Implement the industry-specific standards for sectors such as textile dyeing, viscose fiber, recycled chemical fibers (polyester), and lead‑acid batteries, and promote green development and quality‑enhancing upgrades among enterprises along the rivers.

Notably, the director of the First Division for Supervision of Hazardous Chemicals at the Ministry of Emergency Management stated that, given the typical 2- to 3-year construction cycle for hazardous‑chemical projects, more than 470 such projects are expected to come on stream this year. If risk controls remain inadequate, the sector could enter a period prone to frequent accidents. In response, the Ministry has launched a special study on the safety risks associated with the relocation of the hazardous‑chemical industry, and a new round of nationwide safety inspections is anticipated to be even more stringent.

On April 1, 2023, the industry standard “Guidelines for Safety Management of Chemical Processes” (AQ/T 3034—2022), approved by the Ministry of Emergency Management, officially came into effect. The standard has undergone substantial revisions and adjustments to its content, expanding from the original 12 elements to 20. Among these, eight new elements—such as safety leadership, the responsibility system for work safety, and inherently safer design—have been added.

Thus, it is evident that, regardless of where production is relocated, environmental protection and safety remain the top priorities in the development of the chemical industry.

The shift in the chemical market has become a foregone conclusion!

Taking Jiangsu Province as an example, since 2019, the operating performance of petrochemical enterprises has declined significantly, while the output of inorganic hazardous chemicals has shown a slight overall increase. Jiangsu has developed an industrial spatial pattern characterized by intensive land use, industrial clustering, high-value-added products, and intelligent manufacturing, thereby establishing an industrial layout tailored to regional characteristics. By concentrating the chemical industry and standardizing specialized industrial parks, the province has fostered a distinctive high-end chemical‑industry ecosystem.

On January 30, 2023, Jiangsu Province held a ceremony to officially launch a batch of major citywide industrial projects for the first quarter, covering cutting-edge sectors such as high-end textiles, intelligent equipment, new materials, and new energy, as well as infrastructure and public‑service initiatives. With a total planned investment of RMB 31.2 billion, the province’s strategic industrial layout is steadily coming into sharper focus.

The case of Jiangsu is merely a microcosm of industrial relocation in the chemical sector. From a global perspective, manufacturing—particularly hazardous‑chemical projects—tends to shift from more developed regions to less developed ones.

From the 1990s through roughly the first decade of this century, a large number of hazardous‑chemical projects shifted from developed to developing countries, with China assuming a substantial share. These projects have specific requirements for water resources; given the abundant water supplies in China’s eastern coastal regions, coupled with advantages in capital and human capital, such projects initially expanded rapidly in the eastern part of the country.

Today, the eastern region faces mounting pressure from safety and environmental‑protection regulations. As industries undergo upgrading, projects that carry a certain degree of risk and pollution are increasingly seeking to transform or relocate. Meanwhile, some central and western regions, as well as the northeast, are stepping in to attract such industries in pursuit of development—aligning with the broader patterns of industrial evolution and relocation.

— China Newsweek

The “northern relocation” of major chemical manufacturers is ongoing, and each province is likely to develop production‑specific chemical product clusters as economic growth drivers. For example, Yunnan, Sichuan, and Guizhou specialize in the yellow phosphorus value chain, while Anhui focuses on the epoxy resin value chain. These regional industrial advantages will become increasingly pronounced, giving rise to a new landscape for the chemical industry.

Source: China Pesticide Industry Association