Fine Chemical Industry Develops Rapidly
By Han Qiuyan

Rapid development during 2001-2005

With the progress of production technologies, the rapid growth
of market demand, the improvement of raw material and capital
supply in China and the strategic shift and reformation
conducted by advanced countries under the pressure of
environmental protection and production cost, the fine chemical
industry in China had unprecedented development opportunities
during the Tenth Five-year Plan period (2001-2005). A large
group of products entered the international market and China
became a major market and producer of fine chemicals in the
world.
   According to incomplete statistics, the output value of the
fine chemical industry in China was RMB370 billion- 380 billion
in 2005 (excluding pharmaceuticals, animal drugs and daily-use
chemicals) and the total output of products was close to 20
million tons.

1. Sustained rapid growth of traditional sectors

The market of traditional fine chemicals such as dyestuffs,
coatings and pesticides has already entered the matured stage
in advanced countries. Due to factors such as environmental
protection, advanced countries have quitted the production of
dyestuffs and pesticides with low added value. Development space
has therefore been provided to dyestuff and pesticide producers
in China.
   According to statistics from China Dyestuff Industry
Association, the output of dyestuffs in China was 640.9 thousand
tons in 2005, an increase of 7.12% over 2004. The figure was much
lower than 1.0613 million tons provided by the National Bureau
of Statistics of China. The main reason is that China Dyestuff
Industry Association only counted the output in its members. The
total export amount of various dyestuffs in China was 231.4
thousand tons in 2005, an increase of 2.1% over 2004 and hitting
the historical high.
   The consumption of pesticides in China as a large
agricultural country has been quite high for long years. The
export amount of pesticides increased at an average annual rate
of 21.49% during the Tenth Five-year Plan period (2001-2005)
from 162 thousand tons in 2000 to 429 thousand tons in 2005. China
has therefore become the leading pesticide exporter in the
world.
    Stimulated by construction, automobile and interior
decoration sectors, the output of coatings in China increased
at an average annual rate of 15.74% during the Tenth Five-year
Plan period (2001-2005) and reached 3.82 million tons in 2005.
China has become the second largest coatings producer and
consumer in the world only next to the United States. The
coatings market is the most open to foreign countries in the fine
chemical industry. Well-known world coatings producers have all
established wholly-owned or joint venture companies in China and
greatly promoted the level of the domestic coatings industry.
   With the increasing output, the product distribution has also
become more rational. For example, the output of environmental
friendly varieties such as water-based coatings and powder
coatings already has a considerable proportion. The proportion
of herbicides in pesticides is increasing constantly. The output
of low-grade and non environmental friendly dyestuffs has
reduced drastically.

2.Major breakthroughs in new sectors

Compared with advanced countries, the fine chemical production
in new sectors started rather late in China. There is basically
no transfer of production technologies to China. The fine
chemical production in new sectors mainly depends on China's own
efforts.
    A group of fine chemicals in new sectors achieved commercial
production during the Tenth Five-year Plan period (2001-2005)
and also produced great impact on the international market. For
example, vitamin H has achieved commercial production in
Zhejiang Xinchang NHU Company Ltd. and Zhejiang Medicine Co.,
Ltd. The history of long-term dependence on import has been
brought to an end and export has also been made in great
quantities. The production technology of lysine holds a leading
place in the world. The capacity of lysine has expanded rapidly
and China has turned from a net importer to a net exporter. A
considerable role has been played in stabilizing the lysine
price in the international market. The capacity of vitamin E has
further expanded and China has become the largest producer in
the world. The export amount of vitamin E is already more than
20 thousand tons a year. The competitive edge of citric acid and
lactic acid has also been further enhanced and their export
amount is increasing constantly.

Rapid development will still be maintained during 2006-2010

1. Development trend

To ensure a sustained sound development of the economy, the first
10 years of the 21st century is regarded as the key period for
the strategic readjustment of the economy in China. In the
process of readjustment, various sectors of the national economy
will have constant optimization and upgrading and some new
sectors such as environmental protection, new energies, new
materials and new health-care products will also be formed. The
development of various high-tech sectors needs fine chemicals.
The export of textiles and clothes and the development of
traditional sectors such as crude oil recovery, machine
manufacturing, construction and automobile sectors also need
fine chemicals to achieve optimization and upgrading.
   Besides, the chemical industry itself will develop towards
the fine chemical production. The further integration of the
world's economy and the WTO accession of China will also greatly
promote the fine chemical industry in China.
   To accelerate the readjustment to the chemical industry
itself and enhance the market competitive edge of products, fine
chemicals and especially specialty fine chemicals with great
market potential should be vigorously developed.

2. Analysis to the development of major sectors

     (1) Pesticides
While maintaining the present capacity, the future focus in the
pesticide sector in China will be on the development of products
with high effect, low toxicity and low residue and the further
readjustment to the proportion of insecticides, fungicides and
herbicides in the total pesticide output. In this way, the grade
and the amount of pesticides for export can be increased.
   In insecticides, the output of organophosphorus varieties
with high toxicity will be cut down and a group of varieties with
low toxicity will be developed so as to reduce the proportion
of varieties with high toxicity to less than 5%.
   In herbicides, dry-field varieties and especially new
varieties for corn, soybean, rape, cotton, oil crops and
vegetables will be developed.
   In fungicides, new fungicides, nematocides and virus
inhibitors for fruits and vegetables, varieties for greenhouses,
greening plants, flowers and garden crops in particular, and
seed treatment agents will mainly be developed. A moderate
development will be made to fruit anti-staling agents.
   In pesticide formulations, the proportion of powders,
emulsifiable concentrates and wettable powders will be reduced.
Technologies for the production and application of new
formulations such as suspensions, water emulsions, micro
emulsions, water dispersible granules and micro