As discussed in IBO’s August 15, 2011, issue, China’s 12th Five-Year Plan was initiated last year, with the aim of boosting the country’ R&D spending to 2.2% of GDP, compared with 1.8% of GDP in 2010. Details of the specific industry and regional five-year plans continue to be announced, including the funding amounts and goals for industrial development, R&D and government investments. In this article, IBO updates the details of these plans as they relate to analytical instrument end-markets. Information in this article is primarily based on reports by China’s state media, as translated versions of ministries’ five-year plans were unavailable.

Released in December 2012, the “National 12th Five-Year Plan on Environmental Protection” details new pollution limits for the country. In total, China expects to invest CNY 3.4 trillion ($526.3 billion = CNY 6.46 = $1) in environmental protection over the five-year period, including CNY 1.5 trillion ($232.2 billion) for eight priority projects. Local governments are expected to oversee and finance this Plan.

According to the Ministry of Environmental Protection, the Plan includes goals for four pollutants for 2015 compared with 2010 levels: for water, an 8% decrease in chemical oxygen demand (COD) and ammonia nitrogen output; and, for air, a 10% decrease in sulfur dioxide and nitrogen oxide emissions. It is the first time in a national five-year plan that limits for ammonia and nitrogen dioxide are specified. This year, the country intends to reduce COD and ammonia nitrogen output by 2% and 1.5%, respectively.

Also for air quality, 333 cities will now be subject to the country’s air quality index standards, compared with 113 previously. Annual and daily average limits for particles measuring less than 2.5 µm (PM2.5) in diameter will be added, as will lower limits for PM10 and nitrogen dioxide. In addition, carbon monoxide and eight-hour ozone limits will become part of the national standard. This year, major cities and areas, such as Beijing, the Yangtze River Delta and the Pearl River Delta, will start monitoring PM2.5. All “prefecture-level cities” (central urban areas) will start PM2.5 monitoring in 2015, followed by monitoring across the country in 2016.

Clean energy also figures prominently in China’s plans for 2011 through 2015 and is one of the seven “strategic emerging industries” cited by the central government’s primary five-year plan document. It is expected that non–fossil fuel energy will account for 11.4% of the country’s primary energy by 2015, compared with 8.7% in 2010 and 9.4% last year, according to the National Development and Reform Commission. This month, the Ministry of Industry and Information Technology (MIIT) released its five-year plan for the country’s solar industry. The plan aims for the country’s largest manufacturers of polysilicon, which is used to make solar cells, to reach a yearly production capacity of 50,000 tons each by 2015. Solar cell manufacturers are each expected to have an annual capacity of 5 gW by 2015. The greater volume is intended to reduce the kilowatt-per-hour cost of solar power, allowing greater adoption by Chinese cities and a larger domestic market.

As with many of the industries discussed in the Five-Year Plan, China’s solar industry will also be the focus of consolidation efforts by the government. China aims to have one solar provider generating CNY 100 billion ($15.5 billion) in sales by 2015 and between three and five companies each with CNY 50 billion ($7.7 billion) in revenues. The New York Times reported that the country already produces about 50% of all solar cells and is home to 45% of the capacity for polysilicon production.

The MIIT’s five-year plan for the petrochemical industry was released also this month. As with solar panel production, China aims to close smaller producers in order to promote larger providers. Annual crude oil processing capacity is expected to increase from 450 million metric tons in 2011 to 600 million metric tons in 2015. Four new “refining bases” will be created with a capacity of 20 million metric tons each. Three production bases for ethylene will be established with a capacity of 2 million tons each.

China is the world’s leading source of rare earth metals. As such, the nation plans to use this resource to produce new materials under a five-year plan from the MIIT. Goals include increased production of rare earth metals and development of value-added products. Six types of new materials are priorities: “special metal functional materials, high-end metal structural materials, advanced macromolecular materials, new inorganic non-metal materials, high-performance composite materials, and frontier new materials.” Ten major new materials development firms aim to have sales of more than CNY 15 billion ($2.3 billion) by 2015. Twenty additional leading new materials firms are expected to generate sales of more than CNY 5 billion ($774 million). The leading firms will each devote 5% of revenues to R&D. The industry’s output is expected to total CNY 2 trillion ($309.5 billion) by 2015, compared with CNY 650 billion ($100.6 billion) in 2010.

The MIIT’s five-year plan for China’s pharmaceutical industry aims for sales to grow 20% each year to over CNY 3 trillion ($464.4 billion) in 2015, up from CNY 1.24 trillion ($192.0 billion) in 2010. Consolidation is foreseen as resulting in five firms with more than CNY 50 billion ($7.7 billion) in sales by 2015. The plan foresees pharmaceutical exports growing 20% per year. Fifty Chinese drug companies are expected to set up foreign R&D locations. The country’s five-year drug safety plan calls for all domestic manufacturers to be GMP compliant by 2015. The State Council announced this month that it would raise standards by 2015 on domestically manufactured drugs, including 2,500 synthetic drugs, 2,800 processed Chinese medicines, 200 biologics, 350 medicinal herbs and 650 traditional Chinese medicines.