Can The Petrochemical Industry Undergo A Transformation With $1.2 Trillion Investment?

Recently, seven departments—including the Ministry of Industry and Information Technology, the National Development and Reform Commission, the Ministry of Ecology and Environment, the Ministry of Emergency Management, the People's Bank of China, the State-owned Assets Supervision and Administration Commission of the State Council, and the State Administration for Market Regulation—jointly issued the "Action Plan for Accelerating the Upgrading and Retrofitting of Aging Petrochemical and Chemical Facilities (2026–2029)" (hereinafter referred to as the "Action Plan"). The Action Plan explicitly states that by 2029, the upgrading and retrofitting of aging petrochemical and chemical facilities, as identified in the nationwide inventory conducted in 2025, will be fully completed. Concurrently, a long-term mechanism featuring continuous identification and ongoing retrofitting will be established, providing a clear roadmap for enhancing inherent safety, advancing green and intelligent transformation, and achieving high-quality development in the petrochemical and chemical industry.

China is the world’s largest producer and consumer of petrochemical and chemical products. In 2025, the added value of the petrochemical and chemical industry accounted for 13.7% of the total industrial output, and China ranks first globally in production capacity for over 20 categories of basic chemicals, including refining, ethylene, and synthetic resins. However, behind these impressive achievements lie serious, non-negligible risks.

After years of rapid development, some early-built production facilities have entered their "twilight years." According to Chang Guowu, Director-General of the Raw Materials Industry Department at the Ministry of Industry and Information Technology, China's petrochemical and chemical industry comprises over 27,000 large-scale production enterprises. Some of the early-constructed facilities suffer from low design and construction standards, outdated processes, and inadequate automation and control systems, resulting in significant safety and environmental risks, suboptimal layout, and low operational efficiency. As time passes, the number of aging facilities will continue to grow, and associated risks will accumulate and intensify, adversely affecting the industry's stable operations and high-quality development.

From the perspective of the industry, the joint action by the seven departments is aimed at eliminating risks from the root, and through renovation and upgrading, to clear obstacles for the industry to move forward with a lighter burden.

For a long time, large funding gaps, lengthy approval cycles, and outdated technical standards have been major obstacles hindering enterprise transformation. To address this challenge, the “Action Plan” strengthens inter-departmental policy coordination to form a synergistic support framework, thereby safeguarding enterprise transformation.

In terms of financial support, existing policy funding channels such as large-scale equipment upgrades, technological innovation, and technical renovation relending are utilized to support the updating and transformation of eligible old facilities. Currently, the country has increased the scale of technological innovation and technical renovation relending from 500 billion yuan to 1.2 trillion yuan, with the interest rate reduced from 1.75% to 1.25%; by the end of November 2025, banks have signed equipment update loan contracts with 700 petrochemical and chemical enterprises, amounting to over 330 billion yuan, with an outstanding loan balance of over 140 billion yuan.

In project management, the National Development and Reform Commission and the Ministry of Industry and Information Technology will prioritize supporting old equipment upgrading projects when studying the layout of major petrochemical projects. The Ministry of Industry and Information Technology will work with relevant departments to guide localities in establishing and improving a green channel for the approval of upgrading projects, strengthen element security, optimize the processing procedures for project filing (approval), environmental impact assessment, and safety permits, improve the efficiency of review and approval, and accelerate project implementation.

In terms of strengthening standard leadership, a special action plan has been formulated to focus on addressing the shortcomings in the standards for the renewal and transformation of old facilities.

Gui Gang, Deputy Director of the Planning and Development Bureau of the State-owned Assets Supervision and Administration Commission (SASAC), revealed that central petrochemical enterprises, as the backbone of the petrochemical industry, have a large amount of aging facilities, and the need for renovation and upgrading is urgent. Between 2024 and 2025, central petrochemical enterprises have completed equipment renewal investments exceeding 280 billion yuan, achieving significant results. In the next step, SASAC will promote central enterprises to implement the renovation and upgrading of aging petrochemical facilities with greater intensity and speed through three key tasks: strengthening the main responsibility, implementing "map-based operations," and strictly adhering to safety standards.

To ensure the achievement of renovation goals, the Action Plan outlines six key tasks covering the entire chain—from investigation and planning to implementation, approval, acceptance, and standard-setting—establishing a closed-loop management system.

First, carry out a survey and assessment. All production facilities that have been in operation for more than 20 years will be registered and documented one by one, forming a list of aging facilities; based on industrial policies and standard specifications, an evaluation will be conducted, and disposal opinions will be proposed in categories, forming a work ledger for updating and retrofitting. For aging facilities that do not require updating and retrofitting after evaluation, a review will be conducted every 3 years. The first review for facilities that have undergone updating and retrofitting can be extended to the sixth year after completion of the retrofit.

Second, develop renovation and upgrading plans. Local authorities shall urge and guide relevant enterprises to formulate enterprise-specific renovation and upgrading implementation plans, clearly specifying renovation and upgrading measures, work objectives, schedule arrangements, etc. The completion time for renovation and upgrading work shall, in principle, not exceed five years. Matters specified in the “Work Program for Phasing Out and Renovating Aging Chemical Production Facilities,” jointly issued by the Ministry of Emergency Management and three other departments (Emergency [2024] No. 49), shall be implemented strictly in accordance with the original plan and requirements.

Third, promote quality improvement and upgrading. Enterprises undertaking equipment upgrades are encouraged to benchmark against industry-leading standards to implement safety-oriented, green, and intelligent transformations; accelerate the application of advanced technologies and the replacement of industrial software and industrial control systems. For all new construction projects, energy consumption limits must meet advanced standards or energy efficiency benchmark levels, and environmental performance must reach Grade A standards. Projects involving high energy consumption and high carbon emissions must implement energy consumption and carbon emission replacement at equal or reduced levels, as required. Strengthen daily management of aging facilities and strictly enforce safety and environmental management throughout the upgrade and transformation process.

Fourth, optimize project management. When planning the layout of major petrochemical projects, give priority to supporting the renovation and upgrading of old facilities. Encourage localities to establish and improve green channels, strengthen the guarantee of various elements, optimize the procedures for project filing (approval), environmental impact assessment, land use, water withdrawal, energy conservation review and carbon emission evaluation, and safety permits, enhance the efficiency of review and approval, and accelerate the implementation of projects.

Fifth, ensure proper acceptance management. Local authorities should urge and guide enterprises to complete the construction of renovation and transformation projects according to the "one enterprise, one policy" plan. Enterprises should organize the completion acceptance in accordance with relevant laws and regulations, and the ecological environment, emergency management, and other relevant departments should conduct supervision (inspection) on the acceptance situation in accordance with the law.

Sixth, strengthen standard guidance and support. Implement a special action for upgrading standards for aging petrochemical and chemical plants, focusing on safety enhancement, green transformation, digital and intelligent renovation, and performance upgrading. Establish a comprehensive standard system covering all requirements and stages of the renovation and upgrading of aging petrochemical and chemical plants to fully support and guide such renovation and upgrading efforts.

Analysts believe that with the deep implementation of the Action Plan, China's petrochemical industry will experience a new round of technological iteration and industrial upgrading. The backward production capacity that cannot meet the new standards and lacks safety and environmental protection conditions will be thoroughly eliminated. Enterprises that achieve "rebirth" through transformation will occupy a key position in future market competition. This is not only an optimization of existing assets, but also the cultivation of new quality productive forces.