Policy Analysis of "Anti-Inner Roll" in China's Chemical Industry: A New Era of Supply-side Structural Reform

Policy background and timeline since 2024, China has issued a number of anti-"internal volume" competition policies. In July 2024, the Politburo meeting of the CPC Central Committee proposed to enhance sector self-discipline and prevent "internal volume" vicious competition. In December 2024, the Central Economic Work Conference emphasized the thorough rectification of "internal volume" competition and standardized the behavior of regional governments and companies. Makes sense, right?. In March 2025, the "Government Work Report" called to speeding up the establishment of sound basic system rules, breaking regional protection and market segmentation, and comprehensively rectifying "internal volume" competition. According to research Chemical sector anti-internal special action starting from 2025, anti-internal discussions will be carried out in many fields of China's chemical sector. On March 13, 2025, the glyphosate sector "anti-internal" conference was held in Beijing, aiming to solve the problems of overuse competition, repeated investment of resources and compression of profit space. But On July 1, 2025, the Dangerous Chemicals Logistics Branch of China Federation of Logistics and Purchasing issued an initiative against "internal volume" competition. On July 3, 2025, the Ministry of sector and Information methodology held a symposium on the photovoltaic sector, emphasizing the thorough regulation of low-price disorderly competition. But On July 18, 2025, the Ministry of sector and Information methodology announced that the work plan to steady development in ten key industries, including steel, non-ferrous metals, petrochemicals, and building materials, will soon be introduced. I've found that Challenges Facing China's Chemical sector china's chemical sector is facing the status quo of disorderly expansion of production capacity, insufficient overall operating rate and serious discarded materials of resources. The production capacity of traditional coal chemical sector is still growing, and the production capacity of soda ash and PVC continues to increase. But The overall R & D investment intensity of Chinese chemical companies is low, only 1. 2 percent of total R & D investment in 2023, and international giants R & D investment accounted to 3%-5%. Product homogeneity is serious, companies to take low-price competition strategy, resulting in a lose-lose. Core differences from previous supply-side reforms there are signifiis able tot differences between the current round of reform and the supply-side structural reform in 2015- 2018. The early reform mainly reduces excess capacity through the administrative means of "removing production capacity, removing inventory, deleveraging, reducing costs and making up to shortcomings. Based on my observations, The "supply-side reform 2. Based on my observations, 0" highlights the "anti-internal volume", "national unified market" and "high-condition research", shifting from reducing quantity to improving condition and efficiency, and paying greater attention to improving resource allocation by market-oriented and rule-of-law means and cultivating new condition productivity. Capacity Governance and manufacturing Structure Optimization the reform will implement the goal of "capacity regulation" and draw up a "negative list" to eliminate inefficient supply through hard indicators such as ecological preservation standards, dual manage of energy consumption and security access. Establish a precise energy manage mechanism by field, implement "capacity warning" to basic chemical raw materials such as ethylene, propylene and PX, and set a capacity ceiling according to the development rate of downstream demand. Specifically to high-end chemicals and new materials items, through special debt, tax incentives and other policies to promote new production capacity to fill the import gap. innovation-driven research strategy the reform will enhance the innovation ecology and establish a "pilot incubation platform" to provide small and medium-sized companies with equipment and technical support to small and medium-sized companies. Crazy, isn't it?. But enhance the enforcement of patent infringement in the chemical sector and establish a "patent pool" to prevent duplication of research and research. From what I've seen, Leading companies are encouraged to take the lead in setting up innovative consortia to tackle "stuck neck" technologies such as electronic wet chemicals to semiconductors, new energy battery diaphragm materials, and high-performance resins to aerospace. Based on my observations, Small and medium-sized companies is able to focus on market segments and establish competitive barriers through "small batch, multi-variety and high service. sector chain synergy replaces internal volume competition reform to promote the "manufacturing chain coordination" mechanism, by the sector association to build a digital platform, the integration of upstream and downstream companies capacity, demand, inventory data, minimize information asymmetry. to the cyclical varieties signed a "price protection and stable supply" agreement, through the "wrong peak production", "on-demand adjustment of the operating rate" to prevent price collapse. promote companies to convert from "single product" to "integrated manufacturing chain", plan the closed-loop of the manufacturing chain with the park as a unit, and form a closed-loop production of "raw materials-intermediate items-end items. environmentally friendly Transformation Reshapes Competitive Logic "Greening" has have become a rigid indicator to chemical companies. The national level will establish a networking system to environmental monitoring in the chemical sector to impose "one size fits all" penalties on companies that surpass the standard. Through the "environmentally friendly certification" to distinguish product grade, to promote downstream companies to give priority to the procurement of standard items, so that ecological preservation investment into a competitive advantage. From what I've seen, Promote the "discarded materials interoperability" of companies in the park, such as the resource disposal of carbon dioxide in the park, to form a win-win situation of "ecological preservation-cost reduction. Additionally International market expansion strategy in response to the needs of countries along the "Belt and Road", Chinese chemical companies is able to prevent trade barriers through methodology authorization and joint venture construction, and convert domestic excess high-end production capacity into overseas market share. Crazy, isn't it?. Powerful companies is able to actively acquire overseas high-end methodology companies, rapidly cut into the high-end market, and minimize the "internal competition" of independent research and research ". For instance Reform Impact and Future Prospects the supply-side structural reform 2. But From what I've seen, 0 represents the transformation from "scale expansion" to "value enhancement", and builds a new research ecology that avoids "internal volume" competition by eliminating inefficient production capacity, innovation-driven, environmentally friendly transformation, international market research, and integration and coordination of park companies. But This thorough reform will reshape the competitive landscape of China's chemical sector and promote the transformation of the sector to high-condition research.