At a glance: On December 29, three ministries issued a 14th FYP for the development of industrial commodity sectors. Officials hope to enhance the security, quality and efficiency of production in industries which process raw materials such as petrochemicals, steel and building materials. The top priorities to achieve by 2025 include:
- Improve innovation capacity in new materials such as high-temperature alloys, ultra-high-purity rare earth metals and high-performance special steel; develop several types to the point of mass production and standard application
- Limit energy consumption and carbon emissions; reduce energy consumption per unit of steel and cement production by 2 and 3.7 percent respectively
- Strengthen access to strategic resources, significantly enhance control over the core technology and equipment of key industries
MERICS comment: The document emphasizes the importance of an “autonomous and controllable” industrial system to ensure China’s economic and national security. This means authorities will pay additional attention to possible supply chain disruptions and increase efforts to acquire key industrial technology, such as large-scale melting and casting equipment. It also reflects the government’s commitment to maintaining its position as the dominant producer worldwide in many upstream manufacturing sectors. These include SOE dominated industries such as steel, copper, aluminum, plated glass, etc. where overcapacity is a persistent problem.
But these sectors will have to be gradually transformed to align with China’s decarbonization ambitions. Restrictions on capacity and energy consumption, as well as the planned inclusion of industries such as steel, cement and chemicals in the national carbon market in the coming years, will require producers to invest in green production methods and cut out inefficient factories.
On the other hand, new material industries offer an opportunity for economic expansion, with potential applications in numerous downstream industries, including aerospace, semiconductors, ICT and energy. Cooperation with foreign firms will continue to be leveraged to enhance China’s innovation capabilities in this area, like those previously established with Airbus, Siemens and BASF. Foreign companies can expect attractive offerings as local governments compete to attract foreign capital and R&D operations, as well as foster further partnerships to stimulate indigenous innovation.
Article: 14th Five-Year Plan for the Development of Raw Material Industry (三部委关于印发“十四五”原材料工业发展规划的通知) (Link)
Issuing bodies: MIIT, MOST, MNR
Date: December 29, 2021