China's Coal Chemical Industry Development Strategy

The seeds of China's coal-chemical industry began in 1940s. However, with the development of petrochemical industry in the 1970s, Coal-Chemical Industry was subject to cold. After entering the 21st century, as the price for crude oil kept rising and our dependence on foreign oil increased, Coal-Chemical Industry especially the coal-based energy industry again gained people's attention. To develop coal-chemical industry has great significance to our country. In the first place, the industry can improve the efficiency in the use of coal resources and meet the growing demand for petrochemical products. More importantly, developing coal-chemical industry will help implement oil-substitution strategies, reduce our dependence on foreign energy resources and achieve sustainable growth.After entering the 21st century, the government has introduced several policies to support the development of coal-chemical industry. Under the support of government's polices, coal-chemical industry has received great amount of investment and enjoyed a booming period. Soon, traditional coal-chemical domains such as coal-coke, calcium carbide and methanol industries were subject to over capacity. On one hand, as GDP growth rate remains the criterion in selecting officials, government-leaded investment was the main cause of over-capacity. On the other hand, short-term excess profits resulting from rising oil price leaded to the superfluous investment in traditional coal-chemical industries. During the next 12th five years, coal-chemical industry will undergo an important period of transforming into the newly coal-chemical industry such as coal-to-liquid, coal-to-olefin and coal-to-DME. In this context, we must have clear understanding of the strategic environment of coal-chemical industry in order to better formulate development strategies for coal-chemical industry and achieve sustainable growth in the future.Based on competitive advantage theory, sustainable growth theory, resource and environmental constraint theory and related management theories, this paper will integrate normative analysis and empirical studies to establish development strategies for coal-chemical industry and suggest useful policies. Firstly, this article will examine the strategic environment of coal-chemical industry from six aspects production factors, regional competitiveness, product demand, related and supportive industries, company structure and strategies, government policies, after introducing the industry's status and value chain. Then, the paper will further propose the strategic objectives and development system for the industry. Finally, the paper will suggest useful government policies with regard to the real condition of coal-chemical industry.