BASF's €8.7 billion Zhanjiang base is completed. Why are multinational chemical companies increasingly investing in China?

Ask AI · How will multinational chemical companies strengthen their push in China to drive the global low-carbon transition?

“China is not only the world’s largest chemical market, but also a major engine for future growth in the chemical industry. It is expected that by 2035, more than 75% of the growth in global chemical production will come from China.” Dr. Martin Brudermüller, Chairman of the Executive Board of German chemical giant BASF, said in recent interviews with media outlets such as The Paper (www.thepaper.cn) that in 2025, about 14% of BASF’s sales revenue came from the Greater China region. The full-scale commissioning of the Zhanjiang integrated base is expected to raise this share by around 5 percentage points.

Dr. Brudermüller’s judgment provides the most direct footnote for multinational chemical giants that are stepping up investment in China at present. Against the backdrop of weak demand in the global chemical industry, squeezed profits, and uncertainty in geopolitics, from BASF’s largest single investment in its history in China reaching full commissioning, to the completion of the new factory under Aramco’s subsidiary Aramco-? (Aramco’s subsidiary Alon?) (Aramco’s subsidiary “Arlanx”?) in Changzhou under the Arlanx? portfolio, and to many companies including Covestro and Lanxess (科思创、科莱恩) completing capacity expansion in clusters, since 2025, multinational chemical companies have used real money to demonstrate confidence in the Chinese market.

BASF’s Zhanjiang integrated base officially commenced full operations on March 26. The project’s total investment is approximately €8.7 billion (about RMB 69.2 billion). It is BASF’s seventh integrated production base globally and its third largest integrated production base after Ludwigshafen in Germany and Antwerp in Belgium, operated independently by BASF. The base has more than 2,000 employees. It has already started up 18 units and 32 production lines, and can produce more than 70 products covering basic chemicals, intermediates, and specialty chemicals, serving industries such as transportation, consumer goods, electronics, home care, and personal care.

It is noteworthy that, thanks to long-term green power direct-purchase agreements and investments in offshore wind power projects, the Zhanjiang integrated base will achieve 100% renewable energy power supply. Its core unit—the world’s first ethylene joint plant with a main compressor—uses green electricity exclusively for operation, with annual capacity of 1 million tonnes. It can flexibly process various feedstocks such as naphtha and butane.

Dr. Cordwe? (柯迪文), a member of BASF’s Executive Board and Chief Technology Officer, said that the carbon dioxide emissions at the Zhanjiang base can be reduced by as much as 50% compared with traditional petrochemical bases. Dr. Brudermüller further revealed that in the future, BASF in China will tend toward “incremental investment rather than large-scale greenfield project construction.”

On the same day, at a routine press briefing, a spokesperson for the Ministry of Commerce, He Yongqian, said that recently, top executives of numerous multinational companies, including Apple, Eli Lilly, BASF, Volkswagen, Bosch, and Al Futtaim Group, have visited China in concentrated fashion. “All of them highly recognized China’s strong resilience and innovation-driven vitality, as well as the advantages of a super-large market and a business environment that continues to improve.” She added that “when many multinational companies come to invest in China, what used to be an ‘optional option’ for allocating resources has upgraded into a ‘must-have option’ for strategic development.”

One month earlier, Arlanx? (阿朗新科), a wholly owned subsidiary of Saudi Aramco, also completed the unveiling of a new factory in Changzhou. On February 4, Arlanx? formally opened its new Therban® hydrogenated nitrile butadiene rubber (HNBR) plant with a total investment of $210 million. The new plant is designed for an annual capacity of 5,000 tonnes, with phase one capacity of 2,500 tonnes. After commissioning, Arlanx? will increase its global HNBR total capacity by more than 25%, supporting at least 12.5 million electric vehicle battery-related applications every year.

Faisal Mohammed Al-Faqih, Chairman of the Board of Shareholders of Arlanx? and Senior Vice President of the Liquids Chemicals business at Saudi Aramco, emphasized that China’s growth is very important to Saudi Aramco’s downstream business. The plant’s commissioning “fully demonstrates our confidence in China’s innovation vitality and manufacturing strength.”

“Applications related to new energy and new mobility will be one of the directions with the greatest growth potential in the future, including power battery system platforms, thermal management systems, and high-voltage electrical-related components.” Sun Hong, General Manager of Arlanx? China, told reporters that as China enters the “15th Five-Year Plan” (fifteenth five-year) period, the synthetic rubber industry is shifting comprehensively from “scale expansion” to “high-end, green, intelligent, and international” development. New capacity growth has slowed significantly, and development priorities are shifting to breakthroughs in independent, controllable, high-end applications for high-performance synthetic rubbers and specialty elastomers.

It’s not only BASF and Arlanx?—since 2025, several other international chemical companies have also been stepping up their investments in China.

Covestro (科思创) achieved dual-track commissioning in January 2026: the first phase investment of several tens of millions of euros for a new thermoplastic polyurethane production base in Zhuhai, Guangdong, with annual capacity of about 30k tonnes; meanwhile, it also completed the capacity expansion and retrofit of its toluene diisocyanate (TDI) unit at the Shanghai integrated base, raising annual capacity from 310k tonnes to 370k tonnes.

In November 2025, specialty chemicals producer Lanxess (科莱恩) completed two major expansion projects in Huizhou Dayawan, with investment of 180 million Swiss francs. The focus is on boosting capacity for high-performance surfactants and halogen-free flame retardants. Among them, the second production line of the flame retardants is specifically aimed at meeting the growing sustainable flame-retardant demand in the electric mobility sector.

“Continued investment in China is a core strategy for Lanxess.” said Lanxess CEO Konread? (康睿德). “Currently, China’s market sales revenue accounts for about 10% of Lanxess’s global sales revenue. Over the next few years, Lanxess plans to increase this proportion to around 14% by expanding local production, strengthening local R&D, and advancing local product innovation.”

Against the backdrop of an overall sluggish global chemical industry, why are international chemical giants ramping up investment in China?

From the cost side, Europe is experiencing the loss of competitiveness in its chemical industry. Konread? warned that due to the structural rise in natural gas prices, “Europe has already lost part of its chemical industry.” He also attributes the current predicament to the EU’s carbon tax. “Ten to fifteen years ago, we thought other parts of the world would follow suit—this was originally a great idea, but now it makes it hard for producers to compete with their global peers.”

According to a research report from Guosheng Securities, Europe’s chemical product energy costs are high and labor costs continue to rise. From 2022 to 2025, the capacity utilization rates for chemical products in the EU’s 27 countries have remained at historic lows, putting significant profitability pressure on European companies such as BASF and Covestro.

From the market side, China is not only the world’s largest chemical market, but also holds the absolute weight of future growth. In 2025, the operating revenue of China’s petroleum and chemical industry was 15.67 trillion yuan, up 41.4% from 2020.

More worth attention is that foreign investment priorities have shifted from traditional capacity expansion to high-tech manufacturing. Data from the Ministry of Commerce shows that in the first two months of this year, actual foreign investment in high-tech industries increased by 20.4% year over year. From BASF’s Zhanjiang integrated base to precise capacity expansions by companies such as Arlanx? and Covestro in their respective segments, these investments without exception focus on core tracks of China’s “new productive forces” such as new-energy vehicles, high-end manufacturing, and green low-carbon industries.

At the same time, the Zhanjiang base’s technological breakthroughs in energy transition make China a testing ground for multinational chemical companies to explore low-carbon production pathways. These green manufacturing experiences will in the future feed back into capacity optimization in other regions worldwide. As Dr. Brudermüller said in the interview, “To achieve the low-carbon transition in the chemical industry, the biggest opportunity lies in China. This is not only because China has the most abundant green power resources, but also because the scale of green feedstocks—such as green methanol, green ammonia, and green hydrogen—is far ahead of any other region in the world.”