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6 White Paper on the Business Environment in China
steady agriculture development and continuously increase the Notable Policy Activity
yield for farmer,” the “Light industry restructuring and revital-
ization plan,” VAT reform and export tax rebate adjustments all Guidance on Cement Production
helped shield Chinese producers from the brunt of the crisis, Published by the Ministry of Construction of the PRC on
according to the China National Light Industry Council (CN-
LIC).31 November 14, 2007 and effective May 1, 2008, “Energy-saving
Standards for Cement Manufacturing Plant” (National Stan-
It was later reported by the Ministry of Industry and In- dard No. GB50443-2007) outlines many guidelines for ener-
formation Technology that the plastics industry grew by dou- gy-saving steps in the manufacturing of cement, some of which
ble-digits on average in 2009,32 and in the first half of 2010 total are compulsory.
output of plastic products grew by 20 percent year-on-year to
reach 44.8 million tons.33 Meanwhile, output of plastics and China’s cement production capacity has historically been
synthetic resins arrived at 21 million tons after growing 23 per- concentrated in small plants using older technologies and, as
cent in the same period,34 and investment in the sector grew by a result, being relatively inefficient energy consumers in terms
nearly 27 percent to reach 1.1 billion yuan in roughly the same of overall output. The use of more efficient technologies, com-
period.35 bined with the closure of smaller, older plants in favor of high-
er-volume operations, utilizing better technology will likely
Even if the industry grew in total, research conducted by contribute to energy savings and the reduction of overall en-
Thailand’s National Innovation Agency and Nova Institute vironmental impact while maintaining or increasing overall
GmbH found that “Chinese PLA resin production volumes production. This is consistent both with the overall targets in
‘collapsed’ between 2007 and 2011, as companies there had the 11th 5-year Plan to improve energy efficiency by 20 percent
problems with the quality of their lactic acid, a key building over a five year timeline and also the intended move away from
block of PLA.”36 highly energy-intensive manufacturing.
Accordingly, “Chinese exports of PLA dropped from 4,400 This guidance likely led to the following item, new entry re-
metric tons in 2007 to 237 metric tons in 2009, and remained quirements for companies looking to produce cement.
at those low levels in 2010 and 2011. That has boosted Chinese
imports of PLA from about 1,200 metric tons in 2007 to 4,000 New Entry Criteria for the Cement Industry
metric tons [in 2011].”36 In November 2010, the Ministry of Industry and Infor-
The plastics industry has also turned to modified plastics mation Technology (MIIT) announced revisions to the entry
in an attempt to become more sustainable. Current estimates criteria for the cement industry, which became effective on Jan-
place 75 percent of the Chinese market for modified plastics uary 1, 2011.
with foreign-invested enterprises. Domestic demand for such
materials exceeded 5 million tons in 2010 and is forecasted to The revisions stipulated that:
reach 10.4 million tons by 2015.37
1. Production lines of cement clinker shall adopt a new dry
Finally, the emergence of shale gas resources in both the United process method;
States as well as China have buoyed the outlook for plastics man-
ufacturers in both nations. According to a Plastics News-quoted 2. Production scale of cement clinker shall reach 4,000 tons
analyst based in Houston, Texas, China is likely to move quickly per line each day. For underdeveloped areas where trans-
in capitalizing on newly-discovered shale gas reserves “because port facilities and market capacities are limited, scale re-
[the Chinese] need new energy sources very fast.”38 quirement shall be minimum 2,000 tons per line per day;
Although new investments valued at more than $16 billion 3. Self-possessed fund shall account for minimum 35 per-
are expected in the U.S. aimed at exploiting local shale gas de- cent of the total investment in the building, rebuilding,
posits, “Chinese investment is not likely to be immediate,” in expanding and moving of cement clinker;
part due to the fact that “China’s most-studied shale gas fields
are generally also located in the far northwest of the country, 4. Projects that fail to meet these standards shall not be ap-
where it is costly to bring it to sizable markets either within Chi- proved by authorities.39
na or internationally.”38
Rising Power Tariff Surcharges for Energy-inefficient Production
Beyond energy applications, the gas’ use as a plastic In May 2010, an NDRC plan to raise power tariff surcharg-
manufacturing feedstock looks to be gaining popularity in the
United States and is expected to see similar gains in China as es for energy-inefficient industry went into effect, whereby
investments and production capacity increase.38 “Local governments must cancel any favorable power prices to
energy-intensive firms, including preferential rates in the name
180 of direct trade between power generators and power users.”40
This plan was actually first put into practice in 2006, accord-
ing to Xinhua, but that “in order to stimulate their struggling
steady agriculture development and continuously increase the Notable Policy Activity
yield for farmer,” the “Light industry restructuring and revital-
ization plan,” VAT reform and export tax rebate adjustments all Guidance on Cement Production
helped shield Chinese producers from the brunt of the crisis, Published by the Ministry of Construction of the PRC on
according to the China National Light Industry Council (CN-
LIC).31 November 14, 2007 and effective May 1, 2008, “Energy-saving
Standards for Cement Manufacturing Plant” (National Stan-
It was later reported by the Ministry of Industry and In- dard No. GB50443-2007) outlines many guidelines for ener-
formation Technology that the plastics industry grew by dou- gy-saving steps in the manufacturing of cement, some of which
ble-digits on average in 2009,32 and in the first half of 2010 total are compulsory.
output of plastic products grew by 20 percent year-on-year to
reach 44.8 million tons.33 Meanwhile, output of plastics and China’s cement production capacity has historically been
synthetic resins arrived at 21 million tons after growing 23 per- concentrated in small plants using older technologies and, as
cent in the same period,34 and investment in the sector grew by a result, being relatively inefficient energy consumers in terms
nearly 27 percent to reach 1.1 billion yuan in roughly the same of overall output. The use of more efficient technologies, com-
period.35 bined with the closure of smaller, older plants in favor of high-
er-volume operations, utilizing better technology will likely
Even if the industry grew in total, research conducted by contribute to energy savings and the reduction of overall en-
Thailand’s National Innovation Agency and Nova Institute vironmental impact while maintaining or increasing overall
GmbH found that “Chinese PLA resin production volumes production. This is consistent both with the overall targets in
‘collapsed’ between 2007 and 2011, as companies there had the 11th 5-year Plan to improve energy efficiency by 20 percent
problems with the quality of their lactic acid, a key building over a five year timeline and also the intended move away from
block of PLA.”36 highly energy-intensive manufacturing.
Accordingly, “Chinese exports of PLA dropped from 4,400 This guidance likely led to the following item, new entry re-
metric tons in 2007 to 237 metric tons in 2009, and remained quirements for companies looking to produce cement.
at those low levels in 2010 and 2011. That has boosted Chinese
imports of PLA from about 1,200 metric tons in 2007 to 4,000 New Entry Criteria for the Cement Industry
metric tons [in 2011].”36 In November 2010, the Ministry of Industry and Infor-
The plastics industry has also turned to modified plastics mation Technology (MIIT) announced revisions to the entry
in an attempt to become more sustainable. Current estimates criteria for the cement industry, which became effective on Jan-
place 75 percent of the Chinese market for modified plastics uary 1, 2011.
with foreign-invested enterprises. Domestic demand for such
materials exceeded 5 million tons in 2010 and is forecasted to The revisions stipulated that:
reach 10.4 million tons by 2015.37
1. Production lines of cement clinker shall adopt a new dry
Finally, the emergence of shale gas resources in both the United process method;
States as well as China have buoyed the outlook for plastics man-
ufacturers in both nations. According to a Plastics News-quoted 2. Production scale of cement clinker shall reach 4,000 tons
analyst based in Houston, Texas, China is likely to move quickly per line each day. For underdeveloped areas where trans-
in capitalizing on newly-discovered shale gas reserves “because port facilities and market capacities are limited, scale re-
[the Chinese] need new energy sources very fast.”38 quirement shall be minimum 2,000 tons per line per day;
Although new investments valued at more than $16 billion 3. Self-possessed fund shall account for minimum 35 per-
are expected in the U.S. aimed at exploiting local shale gas de- cent of the total investment in the building, rebuilding,
posits, “Chinese investment is not likely to be immediate,” in expanding and moving of cement clinker;
part due to the fact that “China’s most-studied shale gas fields
are generally also located in the far northwest of the country, 4. Projects that fail to meet these standards shall not be ap-
where it is costly to bring it to sizable markets either within Chi- proved by authorities.39
na or internationally.”38
Rising Power Tariff Surcharges for Energy-inefficient Production
Beyond energy applications, the gas’ use as a plastic In May 2010, an NDRC plan to raise power tariff surcharg-
manufacturing feedstock looks to be gaining popularity in the
United States and is expected to see similar gains in China as es for energy-inefficient industry went into effect, whereby
investments and production capacity increase.38 “Local governments must cancel any favorable power prices to
energy-intensive firms, including preferential rates in the name
180 of direct trade between power generators and power users.”40
This plan was actually first put into practice in 2006, accord-
ing to Xinhua, but that “in order to stimulate their struggling
