China has relaxed its winter pollution control measures because in a devastating trade war, China puts economic growth above environmental governance.
At present, the United States has imposed a new tariff of 20 billion US dollars on Chinese imports, and may rise to 25% on January 1. The Chinese economy is beginning to feel the pressure.
As companies prepare to cope with US tariffs, China's manufacturing growth is weakening.
China's latest official manufacturing purchasing managers index (PMI) fell to 50.8 in September from 51.3 in August, the lowest point in eight months.
At the same time, the Caixin Manufacturing Purchasing Managers Index (PMI) fell to 50.0, dangerously close to the contraction index (below 50).
Chinese manufacturers of finished products exported to the United States have suffered a particularly severe blow, reducing the purchase of raw materials.
For example, the United States imposed tariffs on finished products containing polyvinyl chloride (PVC), and demand fell, causing China's domestic prices to fall by 9% in the week ending September to a nine-month low.
As China's economy slows, Chinese leaders relax environmental regulations to stimulate economic growth. China's official news agency Xinhua News Agency reported on September 27 that Beijing, Tianjin, Hebei and surrounding areas will implement PM2.5 average intensity and day-on-year decline. 3% of the target.
The target will be implemented from October 2018 to March 2019 and will have an impact on thermal power, steel, petrochemical and cement producers.
The newspaper said that this is lower than the 5% reduction proposed in the preliminary plan reported by the South China Morning Post in August, and far below the target of 'at least 15%' in the previous year's plan.
At the same time, it is far below the similar target proposed by Chinese Premier Li Keqiang in March 2018. At that time, Li Keqiang gave the target of an overall 30% reduction in the average concentration of PM2.5 in key regions in 2018.
Local authority execution
Local governments will implement these goals, rather than being enforced by the central government. People think that local government implementation is not as effective as strong central government departments.
The Xinhua News Agency said that in addition, a more flexible approach is needed: 'In a differentiated way, companies that excel in pollution control will not be subject to production constraints.'
For chemical companies, this may mean that older, smaller, more polluting plants will be the target, and the new plant will not be affected.
Due to the relaxation of the new regulations, the closure of plastics processors may be reduced. In recent months, factory closures have been a price inhibitor.
Nonetheless, any benefits from the growth of polymer consumption are expected to be very limited, as the offsetting of earnings will have a negative impact on US import tariffs on Chinese plastic products.
The relaxation of regulations will not prevent the restructuring of the industry, as small-scale, inefficient processors and other manufacturers will continue to be permanently closed for economic reasons.
In addition, the plan to move the factory from the urban area to the chemical park is expected to continue.
Last year, environmental inspections and subsequent closures led to the temporary closure of about 40% of China's total production capacity, and 80,000 factories were charged with violating emissions targets.
The operating rate of the chlor-alkali plant was particularly affected, and the operating rate fell to 50-70%.
More gases for chemicals
According to the new regulations, the general ban on home heating and coal use will no longer be implemented this winter. Instead, local governments will set targets that match local gas and power generation capabilities. This will improve the supply of chemical production this winter.
Last year, the forced conversion from coal to natural gas led to the supply of natural gas for chemical production.
This explains why the profits of methylene diphenyl diisocyanate (MDI) and toluene diisocyanate (TDI) have entered a high level with the closure of the plant. As a result, profit margins and price increases in certain industries last year will not repeat themselves this year.