China’s Petrochemical Industry’s Transition From An Independent System To A Player In The Global Petrochemical Industry

Petrochemical industry, being a global industry, depends on oil resources strongly.Some large oil corporations of the western countries have rose on the foundation ofglobal oil resources. They exploited crud oil and sold products all over the world, socaught the leading rights of global industry. In contrast, China’s petrochemicalindustry had been an independent and substantially closed system based on domesticresources totally. With the opening and Reform of China, the system have beencontacting with the world widely. In the view of globalization, this paper researchedthe development of Tenth Construction Company of SINOPEC（TCC）during1970-2008. Based on the research of the enterprise, the author analyzed the process ofan independent industry system gradually participating in global labor division.The modern petroleum industry originated from the United States1860s, and soon itbecame a global industry. Oil companies of the US, Britain and Netherlands exploitedoil from the US, Venezuela, Mexico, the Dutch East India, Russia and other places,then refined crud oil into a variety of products and sold throughout the world. AfterWorld War I oil companies of western countries monopolized the oil resourcesMiddle East, and exploit it after World War II. By virtue of the Middle East oil, SevenSisters as the representatives of major oil companies had made the absolute advantagein technology and market. They control petrochemical industry of whole capitalismworld until1970s. Oil producers continued to fight for oil interests. The four wars inMiddle East reflect the contradiction of petroleum.In contrast, China’s petrochemical industry developed entirely on the basis ofdomestic resources after1949. From1970s to1980s China had found an independentand closed petrochemical industry by large-scale technique introduction. TCC wasestablished on the background of the historic breakthrough of oil exploration and thedevelopment of China’s petrochemical industry. At the beginning of1990s TCC hadbecame a large petrochemical construction enterprise. In the middle of1990s, affected by bad domestic economy and depression ofpetrochemical industry, TCC got into trouble. Since then China started to takeexport-oriented policy. Although TCC made efforts to reduce the staffs and socialburden, it was not better until the beginning of21st century when China became a bigmanufacturing industry country. China provided world market with mass manufactureproducts, such as textile, clothing, toys, and electronic products and so on, whichneed primary oil products as raw materials and enegy. China accelerated expansion ofpetrochemical production capacity. Even so, from the view of global petrochemicalindustry division, TCC is also at the lower end of industrial chain.Since21st century, demand of oil in developed countries grew slowly. Butmore-resources-consumed business of industry moved to the Middle East, South Asia,India and other developing economies. From the point of the whole world, energyconsumption is growing rapidly, and oil prices continuing to rise. Competition of oilresources was becoming more intense. Western countries headed by USA stepped upto control the oil resources. The wars in Afghanistan, Iraq and Libya all contained thefactors of oil. Large multinational oil companies of western countries still occupy theleading rights of petrochemical industry by technical advantage and the supports ofpolitical and military power.Because the petrochemical industry is resource-dependent distinctively, and the oil, asan important energy, is an crucial factor to restrict the development of nationaleconomy, so the petrochemical industry needs government’s assistance and supportespecially in international competition. The current global petrochemical industrialsystem was built up under the leading of western countries. On the one hand, thewestern countries controlled world oil resource by military force; on the other hand,they developed technologies of exploration, mining and processing, in order tomonopoly the high-top of global petrochemical industry chain. China’s petrochemicalindustry is restricted undoubtedly by the industrial system. Because of the lack ofexternal oil supplements and the disadvantage of technologies in exploration, miningand processing, so China’s petrochemical industry can only engaged in low-endbusiness of the global industrial chain.In the history and today, many countries have been supporting and promoting their national industries by using economic policy, such as trade protection or naiveindustry auxiliary, in order to enhance their international competitiveness. Becausethe petrochemical industry is resource-dependent strongly, western countries in thepast and today use not only economic policy, but also set military force and warsometimes to support their oil companies to obtain oil resources. China is adeveloping country in pursuit of peace. So in the situation that international economiccompetition is increasingly intense, the problem of how China supports petrochemicalenterprises to participate in international competition by national power is worth ofdeep thinking and discussion.