Short items


Oil makers report growing profits

On 24 April, five leading petrochemical firms in China - China National Petroleum Corp (CNPC, parent firm of the listed PetroChina), Sinopec, China National Offshore Oil Corporation (CNOOC), Sinochem and Shaanxi Yanchang Petroleum Corp - reported combined first quarter revenues of 534.8 billion yuan (US$78.6 billion), a drop of 30 per cent compared to last year. Their profits, accounting for 48 per cent of total profits for China’s entire petrochemical sector, decreased by 25.7 per cent to 46.6 billion yuan year-on-year. However, profit in March grew to 28.3 billion yuan, 13.2 per cent up on last year, and grew by 160 per cent over February. Dwindling petroleum prices and the relatively high gasoline price contributed to higher profits in March. 

In March, CNOOC reported 42 per cent growth in net profits to 44.4 billion yuan in 2008, while CNPC and Sinopec’s profits decreased 

Key drug scheme launched

China announced the formal launch of its key drug development scheme, one of its 16 main science and technology programmes for the coming years to 2020, on 5 May. A total of 5.3 billion yuan (US$779.4 million) will be invested into the key drug scheme, consisting of 970 research subjects over the period from 2006 to 2010. The funding will continue after that period if the scheme has proved successful. The aim of the project is to shift China from a pharmaceutical generics maker to a producer of innovative medicines. 

At the launch ceremony, Science Minister Wan Gang said that by the 2010 deadline the scheme will have achieved three breakthroughs: selling Chinese innovative drugs internationally, establishing a group of innovative drug development bases, and receiving international recognition for certain Chinese technological standards. However, in the bidding process, the scheme has been widely criticised by scientists and local pharmaceutical firms as lacking transparency. 

Heavy investment to fight swine flu 

The central government is to invest 5 billion yuan to prevent H1N1 flu transmission, Chinese Premier Wen Jiabao announced on 5 May at a working meeting of the State Council, China’s cabinet. Wen requested that local governments also make corresponding investments. By mid-May, there were over 6,000 confirmed cases of influenza A (H1N1), also known as swine flu, worldwide. On 13 May, the Chinese health ministry announced confirmation of the country’s second H1N1 patient in Shandong Province, two days after the first patient in Sichuan Province. Both people had been travelling abroad before their infection was identified. The 5 billion yuan investment will be used to equip hospitals with new diagnostics facilities and drugs, developing, producing and stock-piling vaccines and medical products, and enhancing medical institutions’ flu testing capacities. Scientists worry that although the H1N1 strain appears to have a low mortality rate, ranging between 2.5 per cent to 7 per cent, it could recombine with other more deadly strains - such as the H5N1 avian flu virus - to form a more dangerous virus. 

Crack down on illegal additives

The Ministry of Health, together with other government departments, announced on 11 May that a recent nationwide inspection campaign uncovered more than 7600 cases of illegal food additives, involving goods valued at 67 million yuan and led to 30 arrests. The campaign, which lasted from December 2008 to March 2009, screened more than 5.7 million food producers and dealers, and covered 71,198 kinds of products. 

Melamine and beta-lactamase in milk, sweetening agents and pigments in wine, and potassium bromate in flour were key targets for the inspection. beta-lactamase is illegally used to hide antibiotic residues in milk. According to the inspection, beta-lactamase was discovered in 5 per cent of milk tested. The inspectors also found 8.6 per cent of wine in China contained illegal sweetening agents and pigments. The inspection took place ahead of China’s Food Safety Law taking effect on 1 June. 

BASF postpone China projects 

The German chemical giant BASF is to postpone projects worth US$2 billion scheduled for Nanjing in southeastern China and the southwestern municipality Chongqing, company chairman J?rgen Hambrecht told leading Chinese financial magazine Caijing on 21 March. The decision was made amidst the company’s efforts to further cut its global outputs. By the end of March, the German firm had cut its worldwide production capacity by 25 per cent. With a joint investment of US$900 million with Sinopec, the Nanjing project is intended to expand the plant’s current ethylene cracking capacity from 600,000 tonnes per year to 750,000 tonnes. BASF also planned to build its second MDI (diphenylmethane-diisocyanate) plant in China with an investment of US$4 billion in 2008. 

The Chongqing project passed evaluation by the Ministry of Environmental Protection early this year. Martin Brudemueller, BASF executive director for East Asia business, told Caijing that it will not abandon the two projects. 

Oil makers report mixed profits 

On 31 March, China National Offshore Oil Corporation (CNOOC) reported 42 per cent growth in net profits to 44.4 billion yuan (US$6.5 billion) in 2008, while the other two Chinese petrochemical giants - Sinopec and PetroChina - have suffered dwindling revenues and profits. In their 2008 annual reports released in late March, PetroChina and Sinopec showed net profits had reduced by 22 per cent and 47.3 per cent to 114.4 billion yuan and 29.8 billion yuan respectively, but Sinopec’s profit was made possible only after it received more than 50 billion yuan in government subsidies for its refining sector. The actual loss by Sinopec was primarily down to its large refining sector, which suffered the gap between surging oil prices and tightly controlled domestic gasoline prices. But analysts say that Sinopec’s profits could increase this year as the gasoline price is adjusted in a more flexible and timely fashion in accordance with changes in international oil price.

Strikes against environmental threats  

In 2008, the Ministry of Environmental Protection (MEP) launched direct investigations into 46 major pollution incidents threatening drinking water safety. The cases made up over a third of the 135 environmental pollution cases the ministry dealt with that year, according to a joint teleconference between the MEP and seven other government departments held on 14 April. The meeting also revealed that the discharges of 17.6 per cent of the 1,530 urban sewage farms investigated in China cannot meet the national or regional standards. 

Environmental minister Zhou Shengxian vowed at the meeting that measures against pollution will be intensified, preventing high levels of pollution and high energy consumption from growing through proactive fiscal policies. Industries related to arsenic products and emissions will be particularly monitored. The MEP released a list of 3,945 potential emitters of polluting water and 3,715 potential emitters of poisonous  gas for focused inspections, covering leading Chinese enterprises like Sinopec, PetroChina and Baosteel. The ministry will also intensify its follow-up monitoring on reported polluting cases.