Changxing Island and China’s Chemical Industry Dominance

Inside the rise of a Northeast China chemical powerhouse

On a stretch of coast near Dalian in Liaoning province, Changxing Island shows how China built a dominant position in chemicals. A single plant that began production in 2012 has been followed by a dense cluster of refineries, crackers and materials factories. The growth reflects a familiar playbook, clear policy direction, sustained state and local backing, and private companies moving fast to add capacity and integrate supply chains.

By 2023 the Dalian Changxing Island, also known as Xizhong Island, petrochemical base joined China’s top 30 chemical industry parks ranked for high quality development. The complex placed third nationwide by economic output among chemical parks. Petrochemical output on the island reached 235.7 billion yuan in 2023. That equaled over half of Dalian’s petrochemical output and roughly a quarter of the city’s above scale industrial output.

Two adjoining zones power the expansion. The Changxing Island area, developed mainly by Hengli Group with more than 240 billion yuan of investment, includes refining capacity of 20 million tons per year. It also produces 4.5 million tons of aromatics, 11.6 million tons of purified terephthalic acid, and 1.5 million tons of ethylene. The Xizhong Island area will be the core site for integrated refining and chemical production and is designed to host the relocation and upgrade of the PetroChina Dalian Petrochemical Company. Plans call for the site to handle 20 million tons of refining capacity and link multiple product chains, including ethylene streams from the Bohai Rim refineries.

Scale alone does not explain the island’s influence. In 2019 Hengli Petrochemical’s refinery and chemical complex reached full operation at 20 million tons per year. Company managers said the integrated plant could turn 20 million tons of crude into 14 million tons of chemicals using advanced hydrocracking that raises crude utilization by about 5 percent. The complex produces 4.5 million tons of aromatics per year to close past shortfalls in domestic supply. Water and energy systems were designed to cut resource use, including seawater cooling and a scheme that uses low temperature waste heat for desalination to reduce freshwater demand by an amount comparable to the annual needs of around 100,000 households.

Where Changxing Island fits into the map

Changxing Island sits on the Bohai Sea to the northwest of Dalian, facing busy shipping lanes to South Korea and Japan. The coastline allows deep draft berths for crude, liquefied hydrocarbons and chemical carriers. Proximity to the Northeast Asian market shortens transit times for exports and eases receipt of imported feedstocks.

Local authorities have moved quickly to build roads, power and storage that match the expansion. The 18 kilometer Petrochemical Avenue is now fully connected across Xizhong Island. To advance a new warehousing project tied to the planned PetroChina relocation, 361 households were moved from a two square kilometer area in about two weeks. Crews opened four new roads in less than a month and brought seven fine chemical enterprises closer to operation by accelerating site work.

The port is also adding a terminal that will anchor a hydrogen focused energy hub. The project includes a 10,000 ton liquefied hydrocarbon berth and a 10,000 ton liquid chemical and oil berth. The terminal is backed by the Dalian Xizhong Island Development Group, COSCO Shipping Investment Dalian and Dalian Menglian Petrochemical. When in service the docks will support the Dingjide new materials complex, COSCO Shipping logistics projects and power sector ventures, while handling the maritime needs of companies in the Xizhong Island petrochemical park.

Hengli’s integrated model and its green pitch

Hengli Group anchors the island’s industrial web. The private conglomerate operates across the full chain, from oil refining and aromatics to PTA, polyester new materials and textiles. Its five PTA lines on Changxing Island give it an annual capacity of about 11.6 to 12 million tons, among the largest in the world. Downstream, the Hengli New Material Science and Technology Industrial Park entered full production after trials. The first phase targets 1.6 million tons of high performance resins, 2.6 million tons of functional polyesters and 600,000 tons of butanediol each year. The company expects the initial phase to reach an annual output value of about 110 billion yuan once it is fully ramped.

Hengli promotes environmental engineering as part of its brand. The industrial park uses embedded sewage treatment so that gray water can be reused inside the complex. Cooling relies on seawater, which avoids the need for large cooling towers. Engineers capture low temperature waste heat from process units to drive desalination that reduces freshwater withdrawals. Site design includes greening and shelterbelts to limit dust and noise.

Chen Jianhua, chairman and president of Hengli Group, frames the approach as a commitment to both economic contribution and environmental management.

“We aim to be economically significant in the region where we establish a factory while striving to minimize our environmental footprint and achieve the best possible outcomes for the local environment.”

Hengli has also moved into equipment manufacturing and maritime logistics. The company acquired the former STX Dalian shipyard and is constructing more than 30 vessels this year. Management targets deliveries of about 60 ships per year once production is fully scaled. Since becoming fully operational in early 2023, the yard has booked dozens of orders valued at more than 5 billion dollars, including bulk carriers and other commercial vessels that tie into the group’s energy and materials logistics.

Moving up the value chain

New projects aim to shift from bulk commodity chemicals toward higher margin materials that feed advanced manufacturing. In 2024 construction began on Liaoning Dingjide’s POE project, with investment over 12 billion yuan. POE, a polyolefin elastomer, is used in automotive parts, photovoltaic encapsulants and cable insulation. On the island, it will sit next to feedstock suppliers and export docks, which can compress time from production to delivery.

Officials say the Huayi lithium battery materials project went from groundbreaking to trial production in about 16 months. The fine chemical engineering innovation park has welcomed dozens of companies focused on process intensification, catalysts and new chemistries. A biopharmaceutical park has also been launched to diversify the base of tenants and expand knowledge intensive industries on the island.

• Dingjide’s high end new materials project includes POE with an expected annual output of 400,000 tons once fully built.
• The Hengli new materials park adds capacity for high performance resins and functional polyesters, raising the share of specialty products.
• A fine chemical innovation park has attracted 36 companies, creating a platform for smaller firms to plug into large scale utilities and logistics.
• Energy storage and hydrogen related ventures are in planning to align with the region’s green energy buildout.

Greener growth and its limits

Local leaders present Changxing Island as a showcase for cleaner industrial production. The development zone received National Green Industrial Park status in 2023 for its work on energy efficiency, circular water systems and integrated waste management. Hengli’s complex replaces traditional cooling towers with seawater, and uses waste heat to support desalination. According to company figures released at full startup, process improvements can save up to 40 million tons of fresh water per year and raise crude utilization rates by about 5 percent. Inside the PTA plant area, landscaping and green belts cover large plots to reduce dust and noise and improve the working environment.

Looking ahead, the zone is planning logistics and production bases for green ammonia, green methanol, green aviation fuels and liquefied petroleum gas products. Officials describe a hydrogen based energy corridor that links Northeast China and parts of Eastern Inner Mongolia, with Changxing Island as a port hub for imports, storage and distribution. Those moves could help lower lifecycle emissions in shipping, heavy transport and some industrial processes.

Cleaner processes and utilities reduce the footprint of petrochemicals, yet they do not remove environmental risks. Continuous monitoring of air emissions, tighter controls on volatile organic compounds, and strict water quality management will determine whether the island can scale output while keeping pollution in check. The design philosophy on Changxing Island pairs large scale production units with centralized utilities and environmental controls, which can make compliance more transparent if enforced rigorously.

Managing overcapacity and competition

China’s chemical boom has also produced a capacity hangover in some product chains. The Ministry of Industry and Information Technology has convened producers of purified terephthalic acid and bottle grade PET chips to address overcapacity and intense competition that erodes margins. The ministry requested detailed data on capacity, production, demand, profitability and the status of projects under construction to guide policy responses.

Industry consultancies report that China’s PTA production capacity has roughly doubled since 2019 to more than 90 million tons per year, while PET chip capacity has also doubled to around 22 million tons. Margins have tightened. Even the most advanced PTA units have recently recorded slight losses per ton on average, while older units face much deeper losses. Trade tensions and tariffs on downstream textiles and apparel in some export markets have also weighed on profits.

For Changxing Island, the response is to move up the ladder toward specialty polymers and materials while keeping costs low through integration. Co location of refineries, steam crackers, PTA lines and polymer plants lowers logistics costs and reduces inventories. Shared utilities, hydrogen networks and central wastewater systems further trim operating expenses. Major companies on the island are adding projects such as POE, high performance resins and battery related chemicals that can carry better margins than basic monomers and fibers. A more disciplined pace of new investments, retirements of older units and the focus on high value products will be needed to balance the market.

Feedstock choices and the ethane shift

Chemical economics often turn on the price and type of feedstock. Naphtha, derived from crude oil, has long been the standard feed for ethylene and downstream plastics in China. Ethane, extracted from natural gas streams, can produce ethylene at lower cost in the right conditions. Chinese companies are adding ethane based cracking capacity between 2024 and 2026 and plan to import more ethane. Analysts expect China to purchase an even larger share of United States ethane exports in 2025 as new crackers, storage and ships come on line. Estimates indicate that ethane based crackers can generate several hundred dollars more per ton of ethylene than naphtha plants during favorable market windows.

The shift requires specialized shipping. Very large ethane carriers handle long haul deliveries, and at least six of these ships are needed to support each million tons per year of ethane cracking capacity. Terminal capacity on both ends of the route is tight, so expansions by pipeline and export operators are critical. China reduced the import tariff on ethane to 1 percent for 2025 to keep input costs low. For Bohai Rim producers, including those clustered on Changxing Island, deep water berths and an experienced maritime workforce create an option to import ethane if projects justify the investment. At the same time, the island’s strategy does not rely solely on ethylene spreads. Aromatics chains, polyester intermediates and specialty polymers provide multiple revenue streams to navigate shifts in feedstock advantage.

Relocation and industrial restructuring

Dalian has long planned to relocate and upgrade older refining units away from urban areas. The Xizhong Island area is designed as the destination for the PetroChina Dalian Petrochemical Company’s move. The concept is to consolidate refining and chemical production inside a modern, integrated site that sits next to dedicated berths, storage tanks and pipeline corridors. The plan targets 20 million tons of refining capacity with connections to multiple product chains and ethylene resources across the Bohai Rim.

Infrastructure upgrades on the island align with that shift. Petrochemical Avenue now runs the spine of the development zone. Warehousing and logistics facilities are advancing to support crude, product and polymer flows. Dalian’s development companies, port operators and energy firms are collaborating on new docks and storage that can handle liquefied hydrocarbons, chemicals and hydrogen related cargoes.

For residents, the industrial focus brings jobs, training opportunities and tax revenue. It also concentrates environmental risk in a defined area, which makes stringent standards and transparent oversight essential. The development zone emphasizes service guarantees for projects, such as rapid power grid connections and accelerated road building, to speed time to startup while keeping planning and safety reviews in place.

Regional impact beyond chemicals

Changxing Island sits at the center of an effort to revitalize Northeast China’s economy. Hengli Group says it has invested around 280 billion yuan in Dalian over the past decade and a half, spanning chemicals, materials and equipment manufacturing. The company’s move into shipbuilding adds a new pillar that complements petrochemicals. Bulk carrier deliveries, for example, plug into the same logistics skills and capital goods supply chains that serve refineries and polymer plants.

Spillovers ripple into small and midsize companies that supply catalysts, packaging, automation systems and maintenance services. Universities and vocational schools in Dalian and the wider region have new reasons to expand programs in process engineering, safety management and materials science. The island’s mix of chemicals, advanced polymers, battery materials, equipment manufacturing and port logistics forms a diversified industrial ecosystem that can withstand swings in any single product line.

What to Know

• Changxing Island near Dalian has become one of China’s most important chemical clusters since a first plant opened in 2012.
• The development zone joined China’s top 30 chemical parks for high quality growth in 2023 and ranked third by economic output among national chemical parks.
• Hengli Group’s investments exceed 240 billion yuan on the island, with refining capacity of 20 million tons per year, aromatics at 4.5 million tons, PTA at 11.6 million tons and ethylene at 1.5 million tons.
• Hengli’s new materials park targets 1.6 million tons of high performance resins, 2.6 million tons of functional polyesters and 600,000 tons of butanediol annually, with an expected output value of about 110 billion yuan once fully ramped.
• Dingjide’s POE project, valued at more than 12 billion yuan, is under construction and is expected to reach 400,000 tons per year at full capacity.
• The zone earned National Green Industrial Park status in 2023, and Hengli reports freshwater savings of up to 40 million tons per year from desalination and process improvements.
• Infrastructure is expanding fast, including an 18 kilometer Petrochemical Avenue and new berths for liquefied hydrocarbons and chemical cargoes.
• China’s industry ministry is addressing overcapacity in PTA and PET, which has pressured margins across the sector.
• Ethane imports are set to rise as Chinese producers add ethane based cracking capacity to lower costs compared with naphtha based plants.
• The Xizhong Island area is planned as the relocation site for PetroChina’s Dalian operations, consolidating refining and chemical chains in a modern complex.
• Hengli Heavy Industries is building ships at the island’s yard, with a goal of delivering about 60 vessels per year at full production.
• Changxing Island’s mix of chemicals, advanced materials, equipment manufacturing and logistics positions it as a durable industrial hub for Northeast China.