Deep Analysis on the Development Trend of Chemical Industry in Western China

recently, a number of western super projects launched in China have released clear signals: the scale and difficulty of the hydropower station project in the lower reaches of the Yarlung Zangbo River (with an investment of 1.2 trillion yuan), the Sichuan-Tibet Railway Project (with an investment of more than 300 billion yuan) and the Xinjiang-Tibet Railway Project (with an investment of more than 300 billion yuan) are rare in history. This strategic layout not only marks the tilt of the national resource allocation to the west, but also lays the foundation for the reconstruction of the chemical industry pattern. Coastal areas have led development in the past 40 years, and the western region may assume the important task of industrial transformation and upgrading in the next 40 years.

Chemical Investment Boom in Western China: Project Characteristics and Industrial Layout

analysis of investment project type

at present, the investment in the western chemical industry shows obvious characteristics of resource orientation. Leading project types include coal and natural gas related chemical projects (such as coal to chemicals, clean utilization of coal, purification and separation of natural gas, etc.), green chemical projects (CCUS project, green hydrogen/green ammonia project, comprehensive utilization of phosphorus and sulfur resources, etc.), and polymer materials, new energy related projects.

From the perspective of investment scale, large-scale enterprises have chosen the western region as a new development base, and the amount of investment continues to rise. This trend reflects that the comprehensive advantages of the western region in cost control, resource acquisition and policy support are being highlighted.

regional differentiation development pattern

the western provinces have formed a differentiated development path based on resource endowment. Relying on abundant coal resources, the northwest region focuses on the development of modern coal chemical industry; relying on the advantages of natural gas resources, the southwest region focuses on the fields of natural gas chemical industry and fine chemical industry. This resource differentiation brings opportunities for competition and collaboration between regions.

In response to regional development differences, western chemical companies are actively promoting resource exchange and complementary advantages, and enhancing overall competitiveness through in-depth coordinated development. This trend helps to avoid homogeneous competition and realize the coordinated development of regional chemical industry.

Development Prospect and Key Trend of Chemical Industry in Western China

policy empowerment to build the whole chain of industrial system

the catalogue of encouraged industries in the western region, which was implemented in January 2025, has injected strong impetus into the development of the chemical industry, adding more than 120 chemical items such as fine chemicals, electronic special gas and high-performance fibers, and eligible enterprises can enjoy 15% preferential corporate income tax policy. This policy dividend will significantly reduce the operating costs of enterprises and enhance the competitiveness of the western chemical industry.

At the same time, the state promotes the construction of "eastern R & D + western transformation" pattern, and promotes the orderly transfer of labor-intensive and high-energy industries in the east to the west. This industrial gradient transfer model is conducive to the western region to undertake high value-added chemical projects and establish a complete industrial chain.

Technological Breakthrough Drives High-end Industry Transition

the western region not only has traditional resource advantages such as coal and natural gas, but also has emerging advantages such as rich salt lake resources, scenery resources and low-cost electricity. The frequent layout of leading enterprises such as Minmetals and Guizhou phosphating has fully verified the value of western resources.

The technological innovation achievements are particularly outstanding: Minmetals Salt Lake's "direct lithium extraction from raw halogen" technology has achieved 70% lithium recovery rate, and it is planned to increase the adsorbent efficiency by another 30% in 2027. Ningxia Taiyangshan Green Hydrogen Project adopts PEM electrolyzer, and the power consumption is reduced to 4.5kWh/Nm & sup3;; Qingtao Energy Chengdu Base mass produced the third generation solid state battery with an energy density of 500Wh/kg, filling the gap in high-end materials in the western region. These technological breakthroughs have provided strong support for the western chemical industry to move to the high end of the value chain.

Green chemical industry to accelerate the rise

driven by the goal of carbon peak and carbon neutrality, the western chemical park is accelerating the integrated layout of landscape storage. The trend of green electricity replacing traditional energy will reconstruct the energy structure of the western region and create conditions for the green transformation of the chemical industry.

Representative projects include: the 320000-ton green ammonia project in Chifeng, Inner Mongolia, is equipped with 2GW photovoltaic, with green hydrogen accounting for over 70%, and the products have passed the EU low-carbon certification. Xinjiang Zhundong Base plans a 5GW coupling project of wind and wind hydrogen production + coal olefin production. It is estimated that the proportion of green hydrogen replacing gray hydrogen will reach 40% and the carbon intensity will be reduced by 30% in 2027. Qinghai Salt Lake Co., Ltd, new 50000 tons of high-purity magnesia production capacity.

Regional collaborative development model is mature

facing the natural disadvantages of location and consumer market, the western chemical industry is strengthening the development of the short board through regional coordination. Shaanxi, Gansu, Ningxia, Mongolia and other provinces have jointly built a modern coal chemical industry belt, jointly tackling key problems in coal-to-aromatics and CCUS technology, and promoting the differentiated development of products. Sichuan, Yunnan, Guizhou and other provinces rely on phosphate rock resources to develop new energy materials. The 600000-ton lithium iron phosphate project of Guizhou Phosphate Group is equipped with Yunnan electronic grade phosphoric acid production line, forming a complete "resource-material-battery" industrial chain.

This regional coordination model effectively integrates the resource advantages of various provinces, avoids repeated construction and vicious competition, and enhances the overall industrial competitiveness.

Strategic Outlook: Global Positioning of Chemical Industry in Western China

the western chemical industry is becoming the core engine of the structural adjustment and transformation and upgrading of China's chemical industry. Through policy innovation, technological breakthroughs and ecological reconstruction, the western region is expected to achieve a global leading position in the fields of new energy materials, green hydrogen chemical industry, and high-end coal chemical industry.

However, the development of the western chemical industry still needs to solve key challenges: to further balance regional resource differences, strengthen cross-regional collaboration and technology sharing mechanisms, and accelerate the development of logistics and transportation, talent reserves and other development shortcomings. Only by making breakthroughs in these areas can the western chemical industry truly become a strategic fulcrum for China's chemical industry to move to the high end of the value chain.

For overseas chemical industry practitioners, the rapid rise of the chemical industry in western China will reshape the global chemical industry pattern, and it is worthy of continuous attention to its technological innovation, capacity release and market expansion dynamics.