China's petrochemical equipment manufacturing sector is at a critical juncture, with significant investment and demand expected in the coming years. According to estimates from relevant departments, during the "11th Five-Year Plan" period, annual investments in petrochemical equipment are projected to reach 30 billion yuan, with a total exceeding 150 billion yuan. The demand for such equipment is estimated at 2.5 million tons, including 700,000 tons of key equipment. Specifically, special equipment like reactors, heat exchangers, towers, storage and transportation systems, heaters, and specialized machinery account for 100,000 tons, requiring an investment of 47.5 billion yuan. The National Development and Reform Commission has identified 28 sectors and 526 products and technologies for encouragement, including infrastructure and services. Within the petroleum and petrochemical industry, three key areas have been emphasized: the development of advanced technologies and equipment for large-scale fertilizer and ethylene plants, the production of large turbine compressors for petrochemical facilities, and the exploration and drilling of oil and gas. As the ancient saying goes, “Heaven does not take, but is subject to others.” The ambitious development plan for the petrochemical industry offers a golden opportunity for the equipment manufacturing sector. However, to seize this moment, companies must recognize their weaknesses and secure full government support. Otherwise, they risk losing out to foreign manufacturers, allowing foreign firms to capture the benefits. Despite progress in domesticating major petrochemical equipment over the past two decades, China has yet to fully realize the goals set by the State Council’s 1983 “Decision on Grasping the Development of Major Technical Equipment.” Localization efforts have continued for more than 20 years, alongside ongoing technology imports, resulting in an ever-widening gap with global competitors. Although China ranks fourth or fifth in the world in petrochemical equipment output, its overall scale remains only one-fifth of the U.S., one-fourth of Japan, and one-third of Germany. There are over 500 petrochemical equipment manufacturers in China, but none have emerged as large-scale backbone enterprises. No company has entered the world’s top 500, and the industry still lacks the capability to supply large-scale equipment for major projects. The industry is characterized as “big but not strong,” with weak government guidance contributing significantly to the challenges. Without proper direction, the industry remains fragmented, with many small companies competing in a limited market. This has led to disorganized competition, redundant product structures, and low-tech, low-value outputs. Currently, over 300 enterprises in the oil drilling and special equipment sector operate in China, with numbers continuing to grow. This fragmentation leads to inefficient resource allocation, scattered capital, and dispersed technological capabilities, making it difficult to achieve scale. In addition, the limited domestic market results in intense competition, often driven by price-cutting rather than innovation. Product structures are highly similar, with many companies producing the same goods without differentiation. For example, multiple manufacturers produce oil and gas steel pipes, drilling rigs, and wellhead tools, but few invest in meaningful technological breakthroughs. Most domestic equipment remains outdated, with many units technically inferior to international standards. Corporate integration has also been slow. Formerly state-owned enterprises have undergone restructuring, and now the industry includes a mix of state-owned, private, joint-venture, and foreign-owned companies. This lack of coordination prevents the formation of large, efficient enterprises capable of meeting future demands. To address these issues, the government must play a leading role in guiding and integrating the industry. Spontaneous market-driven integration is unlikely to achieve the necessary scale and efficiency. The localization of major technical equipment is not just a corporate task—it reflects national strategy and safeguards economic security. Compared to the petrochemical equipment sector, the challenges in the oil equipment industry are even greater. Over 60% of petrochemical plant technologies come from abroad, with limited independent intellectual property. Basic research is weak, and equipment R&D lags behind process technology. Imported equipment is often re-introduced without effective adaptation or innovation, leaving the industry stuck in imitation. Domestic manufacturers also face issues of small-scale operations, overcapacity in general equipment, and insufficient capacity for major equipment. R&D efforts remain fragmented, lacking professionalization and standardization. Without coordinated efforts and policy support, it will be difficult to catch up with global standards. In conclusion, the petrochemical and oil equipment manufacturing industries must adapt to long-term national needs. To fully revitalize the sector, it is essential to address current gaps through government leadership, strategic coordination, and sustained policy support. Only then can China build a strong, competitive, and self-reliant equipment manufacturing industry.

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