BASF, the German chemical company, has broken ground on a $10bn petrochemical complex in southern China, becoming the latest foreign group to increase its presence in the country as Beijing gradually relaxes restrictions on overseas investment.
The facility in Guangdong province, to be completed by 2030, is the largest investment in BASF’s 154-year history and reflects confidence in the growth of China’s chemical market, said chief executive Martin Brudermüller.
“You cannot get nervous because now we have a market slowdown, global disruptions from trade and the auto industry having negative growth,” said Mr Brudermüller. “To invest in a site like this you have to believe long term in the market fundamentals.”
The company predicts that China will account for 50 per cent of global chemical demand by 2030, up from 40 per cent today. BASF said the plant would be fully operational within a decade and would employ thousands of workers.
Beijing loosened restrictions that excluded foreign companies from investing or taking ownership stakes in industrial and financial sectors after the pace of growth of foreign direct investment into China slowed to just 3 per cent last year.
Foreign companies have long been excluded from several high-growth sectors or forced to form joint ventures with Chinese companies. US and European chambers of commerce have called on Beijing to accelerate access for foreign investment.
The BASF facility, in the city of Zhanjiang, is the first of its kind in China that will be fully owned by the company after Beijing allowed full foreign ownership of chemical “cracking” facilities used to produce plastics.
BASF said the plant would produce 60,000 metric tonnes of plastic by 2022. Chinese central government officials attended the groundbreaking ceremony on Saturday.
“It means [that for] each and every decision we don’t have to ask anyone. That is operational freedom. In a joint venture you have a much slower process,” said Mr Brudermüller.
Full ownership could also encourage companies to use more advanced technology in China, he added. “There are a few products, I would call them my crown jewels, that I might not share and keep them for myself. That is an opportunity.”
Several US companies have announced new facilities in China despite Washington and Beijing’s trade dispute. ExxonMobil said last year that it planned to build a petrochemicals complex in Guangdong province reportedly worth $10bn.
Belgian chemical company Solvay last week said it would expand its research centre in China and increase its production of speciality plastics in the country, where it has annual sales of more than $1bn.
“Even if GDP [growth] has slowed there is much growth to come from China,” said Ilham Kadri, Solvay’s chief executive. “The ease of doing business is improving year-on-year.”