A number of deputies of the National People’s Congress (NPC) proposed to break the monopoly of state-owned enterprises during the Two Sessions (NPC and Chinese People's Political Consultative Conference) held in March 2013. Among them, Tang Yilin, the President of Jinan Shengquan Group Co., Ltd. (Shengquan Group), put forward the "Suggestion on Accelerating the Development of the Cellulose Ethanol Industry to Ease Fog and Haze", which suggested the decentralization of the fuel ethanol's examination and approval authority so the product's circulation could get rid of the state-owned enterprises' control, according to CCM’s monthly report, Corn Products China News, issued in March.
Recently, a serious haze in some northern cities of China such as Beijing has shocked Chinese people (PICTURE 1). The content of PM2.5 (PM=Particulate Matter) in Beijing has exceeded 500 μg/m3, hugely threatening residents’ health. Among all, 22.2% of the PM2.5 was attributed to the dilapidated motor vehicles. Therefore, the public required the Chinese government to raise the quality standard of gasoline and use more clean energy sources such as fuel ethanol gasoline, a mixture of fuel ethanol and gasoline with a volume ratio of 1:9. Fuel ethanol gasoline can reduce the release volumes of carbon monoxide and carbon dioxide by about 25-30% and 10% respectively.
However, fuel ethanol is developing slowly in China. At present, there are six fuel ethanol producers designated by the government (only fuel ethanol producers designed by the government can produce and sell the product in China) with a capacity of about 2 million t/a in China. Amongst the six, five are state-owned enterprises. Although the only enterprise not owned by the government, Shandong Longlive Bio-technology Co., Ltd., has a 51,500t/a capacity of cellulose ethanol and 60% of shares of the company's fuel ethanol project are owned by two state-owned enterprises.
China has a large potential to produce dozens of millions of tonnes of fuel ethanol with crop straw and waste from agriculture and forestry. Some enterprises have launched production lines in the past two years. But it is quite difficult for private enterprises to get a designated production certificate of cellulose fuel ethanol under the policy that “only designated producers can produce cellulose fuel ethanol and sell the product to appointed enterprises”. Non-designated fuel ethanol producers cannot enjoy preferential policies or sell their products as fuel ethanol even though they are able to produce qualified cellulose fuel ethanol. In Q3 2012, the Shengquan Group, one of the top 500 private enterprises in China, put its 20,000t/a cellulose ethanol production line into operation and applied for a designated production certificate. But it has not received any reply from the government yet.
Therefore, Mr. Tang suggested the government to modify relevant policies to accelerate the development of the cellulose ethanol industry in China. On one hand, the examination and approval authority should be decentralized to provincial or municipal governments, which can arrange the flow of fuel ethanol according to local market situations. On the other hand, some unreasonable status quo should be changed, such as the joint share of state-owned enterprises in the circulation of the product, giving more decision-making power to fuel ethanol producers.
Table Contents of Corn Products China News 1303:
Domestic import volume of DDGS up 41.3% in 2012 over 2011
Chinese corn products Imp. & Exp. analysis in Jan. 2013
Market price of furfural increases during Feb.-March 2013
Domestic market price of edible ethanol decreases in the past five months
Shengtai Pharmaceutical: gross profit up while net profit down in H2 2012
Baolingbao approved to issue new non-public stocks
Luzhou Bio-chem performs poorly in 2012
Fufeng Group adopts aggressive low-price strategy towards minority amino acids market
Chinese government may strengthen elimination of backward capacities in 2013
NPC deputies require more rights for private enterprises in cellulose ethanol industry
2012/2013 outlook for corn market in China
China continues to levy anti-dumping duty on potato starch from the EU
Corn Products China News, a monthly publication issued by CCM on 20th, features “Supply and Demand”, “Import and Export Analysis”, “Price Update”, “Market & Company Dynamics”, “Policy”, “Corn Supply” and other more information researched and reported by CCM’s professional journalists. It is a reliable intermediate for you to know more about the corn industry in China even in the globe.
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