The chemical industry is the third largest in China, after textiles and machinery, and accounts for 10% of the country’s GDP, as well as for between 35% and 40% of the global demand growth for chemicals.

China’s chemical industry is the second largest consumer, after the US, of basic chemical products - fully 45% of the total for Asia. The estimated growth in domestic demand for chemicals in 2005-2006 is now estimated at seven to eight percent.

However, despite this growth, China has a net chemical deficit with the world market and is heavily dependent on imported materials. This dependency has been affected by price trends in the world market caused by heavy international demand for raw materials, petroleum and other chemical inputs.

China joined the World Trade Organization in 2001, which committed it to cutting tariffs on chemicals. In coming years, this could expose weaknesses in various parts of the domestic chemical manufacturing centre.