Shanghai Huayi, one of China's key chemical conglomerates, Thursday signed contracts worth 13 billion yuan (US$1.5 billion) with Chinese and foreign investors.

From that investment, funds from German, US and French investors will be used to launch projects to produce isocyanatie, carbon black and ionic membrane caustic soda, all of which are chemical raw materials for other industrial products.

To date, Huayi's foreign funding, including yesterday's contracts, exceeds US$1 billion. That is a major stake of the company's plan to attract US$1.6 billion by 2005, said Shen Liping, vice-president of Shanghai Huayi (Group) Company.

"Some heavily-invested projects for the next two years are being negotiated with foreign investors," Shen said, but she gave no details.

Huayi has set up 63 foreign-funded ventures with a combined investment of US$2.35 billion. Its sales in the first half of this year climbed to 10 billion yuan (US$1.2 billion), up 20 percent over the same period last year.

Under its development strategy, Huayi plans to increase its annual sales to 32 billion yuan (US$3.9 billion) in 2005 and 66 billion yuan (US$8 billion) in 2010.

To reach those goals, the city government has agreed to build a petrochemical industrial base covering an area of 60 square kilometres along the northern Hangzhou Bay, said Zhang Peizhang, chairman of Shanghai Huayi (Group) Company.

With that base, the city aims to achieve an annual refining capacity of 30 million tons of oil, producing 4 million tons of ethylene and turning out 4 million tons of new chemical materials, Zhang said.

"If all these projects go smoothly, the city will become the largest chemical industry base in Asia," he said.

Shen said Huayi is co-operating with the Ningxia Hui Autonomous Region and the Daqing Oilfield in Heilongjiang Province to manufacture methyl alcohol, caustic soda, and polyvinyl chloride by utilizing local resources. These raw materials will be available for the city's chemical industry, she added.

Zhang told foreign businesses at yesterday's signing ceremony that Shanghai plans to invest US$8 billion in its chemical industry park at Hangzhou Bay.

Some projects such as a 900,000-ton ethylene project are being constructed and some will be launched soon, he said.

"Huayi will, in the form of sole-funded ventures and joint ventures, launch projects valued at 20 billion yuan (US$2.4 billion) in the park," Zhang said.

Meanwhile, Huayi is preparing a logistics centre and a chemical wharf as an important part of the city's Yangshan Deep-Water Port Project, which is located in the neighbouring Zhejiang Province.

The wharf will be built in two phases, with the first handling 8 million tons of chemicals annually and the second reaching 23 million tons per year.

(China Daily September 19, 2003)