A Review of China’s Plastics Processing Industry in 2018 and a Prospective Outlook for 2019

　　In 2018, China’s plastics processing industry maintained stable overall performance within an appropriate range; although the growth rate slowed somewhat, the trend of steady progress persisted. In 2019, the fundamentals underpinning the country’s sound and stable economic development remained unchanged, the factors of production supporting high-quality development stayed intact, and the long-term momentum of steady improvement in the plastics processing sector continued unabated.

2018 Year in Review

　　I. Overall operations remained stable, with growth moderating.

　　1. Key economic indicators continued to grow. In 2018, enterprises included in the national statistical aggregate for the plastics industry recorded a cumulative output of 60.4215 million tons, up 1.10% year on year; 15,571 large-scale enterprises reported main business revenue of RMB 1.806175 trillion, an increase of 5.04% year on year; and realized profits of RMB 95.04 billion, up 3.28% year on year. The profit margin on main business revenue stood at 5.26%, down 0.68 percentage points from the previous year, while the growth rate of industrial value added was 3.7%. Overall, key economic indicators showed steady expansion, underscoring a fundamental trend of stable progress.

　　2. Exports remained stable and improved. In 2018, despite a complex and volatile international trade environment and ongoing Sino‑U.S. trade tensions, the national plastics industry still recorded substantial year‑on‑year growth in cumulative export delivery value. The sector’s total export delivery value for the year reached RMB 230.935 billion, up 7.21% year over year—a growth rate that was 1.57 percentage points higher than the same period of the previous year and exceeded the 7.1% increase in China’s overall merchandise exports for 2018. Meanwhile, all subsectors within the plastics industry posted year‑on‑year gains in export delivery value; in particular, the manufacturing of plastic sheets, pipes, and profiles saw a year‑over‑year growth rate of 22.89%, thereby achieving the goal of steady and improving import‑export performance.

　　3. The implementation of the “Three‑Product” strategy has yielded new results. Structural adjustments and a shift in development models have been thoroughly carried out across both the industry and individual enterprises. In response to diverse customer needs, companies have developed new products with enhanced functionality and greater value, gradually transitioning from single‑product, single‑function, low‑end offerings toward multi‑variety, multi‑process, multifunctional, multipurpose, and high‑end solutions, thereby expanding into new application areas. Industrial structure has continued to improve, and product quality has steadily risen. For example, in the polyester film sector, amid product homogenization, firms have pursued both product innovation and brand management, broadening application domains and establishing a foothold in highly competitive domestic and international markets. In the profile‑based doors and windows industry, lower‑end product lines are being phased out, while varieties such as ASA‑coated and laminated profiles—catering to customers’ diversified demands—are steadily increasing, placing the sector overall in a phase of product portfolio adjustment. Meanwhile, in the EPS foam plastics industry, despite the ongoing contraction in the traditional exterior wall insulation market, lightweight foamed materials like EPP and EPO are experiencing rapid growth, extending the scope of applications for conventional foam products.

　　4. Ecological development has garnered attention from all stakeholders and achieved substantial progress.

　　In recent years, the rapid growth of new business models—such as food delivery, express logistics, and e‑commerce—has led to the widespread use of single‑use plastic products. While these products have enhanced convenience and boosted economic development, they have also brought pressing challenges in post‑consumption management. On December 30, 2018, the Hainan Provincial Department of Ecology and Environment issued a public notice soliciting comments on the “Implementation Plan for the Comprehensive Prohibition of the Production, Sale, and Use of Single‑Use Non‑Degradable Plastic Products in Hainan Province (Draft for Public Comment).” This policy will impose significant constraints on the market for single‑use non‑degradable plastics, spur the development of the waste‑plastic recycling and reuse industry, and promote the market adoption of biodegradable plastics. The implementation of these measures is expected to usher in new transformations within the plastics sector and accelerate the transition toward ecological sustainability.

　　In October 2018, the “2018 China International Plastics Exhibition and the Third Exhibition on New Plastics Materials, Technologies, Equipment, and Products,” together with the “2018 China Plastics Processing Industry Science and Technology Conference” and a series of related events, were successfully held in Nanjing. The event achieved new milestones across all key metrics—exhibition space, participating companies, professional visitors and buyers, and total attendance. This edition of the exhibition brought together industry resources and expertise, facilitated precise alignment between technology and market demand, and fostered coordinated development throughout the plastics processing value chain, thereby making a positive contribution to the healthy growth of China’s plastics processing sector and the broader real economy.

　　II. The industry tackles tough challenges and forges ahead with determination

　　In 2018, China’s plastics processing industry entered a new phase of structural adjustment and industrial upgrading, confronting challenges such as weak market demand, persistently high raw material prices, rising labor costs, escalating international trade tensions and shifting external conditions, as well as stringent environmental compliance requirements. Despite these difficulties, industry stakeholders pressed forward with determination, forging ahead through adversity and embracing innovation.

　　1. Rising operating costs are driving upgrades in corporate management.

　　In 2018, although prices for some raw materials returned to more rational levels—such as the polyurethane feedstocks MDI and TDI, which saw substantial year‑on‑year declines, and polyether and PO (propylene oxide), which also remained at relatively low price levels—the majority of raw material prices continued to rise or stayed at elevated levels. According to statistics, from January to September 2018, raw material prices in the industrial producer price index increased by an additional 7.1% year over year, following a 11.5% rise in 2017, while the ex‑factory prices of plastic products either remained unchanged or recorded only modest increases, severely squeezing profit margins across the plastics industry. Moreover, rising labor costs, higher financial expenses, intense market competition, and weak demand have all prompted companies to upgrade both their product offerings and their management practices.

　　2. The “ban on waste” has prompted companies to adjust their business strategies.

　　Over the past two years, the Chinese government has frequently introduced new policies—such as banning the import of foreign waste and advancing reforms to the solid-waste import management system—resulting in increasingly stringent and detailed requirements and delivering significant results. According to statistics, in the first half of 2018, the total volume of imported solid waste fell below 10 million tons, a year-on-year decline of 56%, with imports of waste plastics dropping by more than 99%. As a result, the plastic recycling industry has adjusted its business strategies, with companies gradually shifting toward domestic waste‑plastic collection and processing or establishing overseas facilities to produce recycled pellets.

　　3. Environmental remediation drives the industry’s green development

　　In 2016 and 2017, the central environmental protection inspection covered all 31 provinces, autonomous regions, and municipalities directly under the central government, elevating environmental protection to an unprecedented strategic priority. In 2018, with the continued introduction and implementation of environmental policies and the ongoing advancement of inspection campaigns, new and more stringent requirements were imposed on plastic-processing enterprises. Compared with the resistance and sense of being caught off guard in 2017, by 2018 companies had generally strengthened their environmental awareness, prioritized clean production, rigorously aligned themselves with national environmental standards, and promptly addressed non‑compliant areas. Through measures such as switching from coal to gas, relocating to industrial parks, and implementing VOCs control, the industry gradually moved toward standardization, ensuring its healthy and sustainable development.

　　4. The international trade landscape is accelerating the industry’s expansion into emerging markets.

　　On June 15, 2018, the U.S. government published a list of Chinese imports worth $50 billion that would be subject to an additional 25% tariff. Starting September 24, the U.S. imposed a 10% additional import tariff on $200 billion worth of goods originating in China. Among these, 36 tariff‑subject products from the plastics industry accounted for $9.088 billion in exports to the United States in 2017, representing 60.45% of total plastic‑product exports to the U.S. and exerting a significant impact on the plastics processing sector. Amid an increasingly volatile international trade environment, the industry has been actively expanding into emerging markets.

2019 Outlook

　　The Central Economic Work Conference pointed out that the fundamental factors underpinning China’s sound and stable economic development remain unchanged, and the production‑factor conditions supporting high‑quality development have not altered. The current state of the plastics industry is fully consistent with this assessment, and the overall long-term trend of steady progress remains intact. In the face of the new circumstances, the plastics processing sector must redouble its efforts in product innovation, technological upgrading, intelligent manufacturing, and green development, striving to forge ahead and drive the plastics processing industry toward high‑quality growth.

　　I. Production and profit growth expectations are favorable.

　　In 2018, influenced by factors such as the waste‑import ban, environmental‑protection crackdowns, and Sino‑U.S. trade tensions, year‑on‑year profit growth in the first half was only –2.95%. However, profits rebounded month by month in the second half, with December’s year‑on‑year increase reaching 25.67%, bringing full‑year profit growth to 3.28%. Despite a complex and volatile economic environment in 2019, profit growth is expected to maintain its upward trajectory. With the easing of Sino‑U.S. trade tensions, prospects for domestic waste‑plastic recycling, and the rapid expansion of plastic packaging demand driven by the booming e‑commerce and food‑delivery sectors, plastic‑product output is likely to continue growing steadily in 2019.

　　II. High-quality development is receiving heightened attention, and brand‑building will be progressively promoted. As environmental regulations tighten, industrial structures upgrade, and industry standards are formulated and refined, low‑end products will gradually be phased out of the market. The sector will halt or scale back low‑level, redundant investments, seek new avenues and growth drivers, and strive to enhance product quality and profitability. Furthermore, the industry will strengthen its commitment to excellence, champion the “craftsman” spirit, and, by improving quality, expanding product variety, and building strong brands, deepen supply‑side structural reform—producing high‑quality goods, cultivating reputable brands, and bolstering brand competitiveness.

　　III. Innovation-Driven Leadership in Industry Development At present, a new round of scientific and technological revolution and industrial transformation is taking shape. The widespread integration of information technology into the industrial sector is catalyzing profound changes in development paradigms, technological systems, manufacturing models, and value chains. Collaboration, intelligence, sustainability, and service‑oriented approaches are increasingly becoming core values in manufacturing. Technologies such as the Industrial Internet, big data, and 3D printing will reshape the manufacturing technology landscape, while product personalization, high-end offerings, small‑batch production, and customized manufacturing will define emerging trends in the industry. The plastics processing sector will continue to deepen the integration of informatization and industrialization, vigorously implement “Made in China 2025,” advance smart manufacturing, adopt digital and intelligent technologies, and achieve an intelligent transformation of plastic processing.

　　Fourth, environmental protection requirements are becoming increasingly stringent, accelerating the industry’s transition toward high-end, green practices. The Ministry of Ecology and Environment will conduct assessments and evaluations of the Three-Year Action Plan for Winning the Battle for Blue Skies. Starting in 2019, China will also spend four years completing the second round of central ecological and environmental inspections, along with follow-up reviews. These new environmental policies will impose ever‑stricter standards on plastic processing enterprises. While they may temporarily affect current operations and lead to the exit of non‑compliant firms, in the long run they will foster the plastics industry’s green, healthy, and standardized development, promoting its sustainable and high‑end transformation. Companies will place greater emphasis on environmental protection and energy conservation and emission reduction throughout production and application processes, pursue clean manufacturing and eco‑friendly management, intensify research and development of innovative environmentally friendly materials, and reduce post‑consumption waste at the source.

　　Following the national ban on the import of solid waste, China’s domestic plastics recycling industry will receive government encouragement and support. This will drive industrial restructuring, upgrades to product portfolios, and advancements in processing technologies and techniques, while also leading to the gradual improvement of the plastic recycling system.

　　Policy measures will be strengthened to regulate single-use plastic products. It is expected that, starting in 2019, relevant application standards for plastic products will be issued in stages. In the years ahead, biodegradable plastics will continue to receive robust policy support, and the industry will intensify research, development, and deployment of bio‑degradable plastics.

　　V. The scale of emerging markets will expand. The Central Economic Work Conference emphasized expanding import and export trade, diversifying export markets, and advancing all‑round opening-up. In the past, China’s plastic products exports relied heavily on traditional markets, particularly those in developed countries such as the United States, Europe, and Japan. According to customs statistics, in 2017, China’s exports of plastic products to Belt and Road countries and ASEAN countries totaled US$18.789 billion and US$8.202 billion, respectively, accounting for 29.95% and 13.01% of total exports. The relatively modest trade volumes also indicate that these markets hold substantial room for growth and significant potential going forward.

　　In 2019, plastic-processing enterprises will continue to proactively expand overseas, focus on emerging markets, participate in the Belt and Road Initiative, develop international markets, and increase exports. They will seize opportunities in emerging markets to actively engage in international capacity cooperation, create conditions for leveraging both domestic and international markets and resources, and strive for joint consultation, co‑construction, shared benefits, and common development.

　　Looking back on 2018, all members of the plastics processing industry rose to challenges and forged ahead, achieving solid overall performance characterized by stable operations and steady progress. Looking ahead to 2019, for the plastics processing sector to sustain steady growth, it must ramp up R&D investment, remain committed to innovation-driven development, accelerate technological advancement, and promote informatization, intelligentization, and eco‑friendly practices. The China Plastics Processing Industry Association will continue to lead collaborative innovation across the industry chain, facilitate precise alignment between demand and supply, strengthen a commitment to quality excellence, uphold the spirit of craftsmanship, foster high‑quality, high‑end products, advance green development and clean production, deepen supply‑side structural reform, and propel the industry toward high‑quality growth.