A research report from Guotai Haitong Securities Co., Ltd. indicates that the government's 2026 work objectives emphasize advancing the development of a unified national market and intensifying efforts to curb "internal competition." Simultaneously, the report highlights the need to accelerate a comprehensive green transition, guided by carbon peak and carbon neutrality goals, to synergistically reduce carbon emissions, cut pollution, expand green initiatives, and foster growth, thereby strengthening the momentum for green development. The era of solely pursuing capacity expansion in the petrochemical industry has ended. As measures to curb internal competition and promote a comprehensive green transition deepen, the survival space for small and medium-sized enterprises that fail to meet environmental standards, have high energy consumption, and low technological levels will further shrink. Leading companies with technical strength and scale advantages are expected to benefit. Key views from Guotai Haitong Securities Co., Ltd. are as follows:
The Premier delivered the government work report, maintaining a positive tone with increased focus on efficiency. On March 5, 2026, the Fourth Session of the 14th National People's Congress opened in Beijing, where the Premier presented the government work report. The overall tone continues to be positive, with greater emphasis on efficacy. Under the general framework of "seeking progress while maintaining stability and improving quality and efficiency," the 2026 government work report builds on the "Five Musts" recognized at the Central Economic Work Conference, stressing the combination of policy support and reform innovation, the close integration of investment in physical assets and human capital, and addressing external challenges through internal strengthening.
The government work report calls for deepening the development of a unified national market and intensifying efforts to curb internal competition. When outlining the 2026 work objectives, the report emphasized the need to advance the construction of a unified national market, formulate regulations for its development, and deepen reforms in the bidding mechanism. It also highlighted strengthening anti-monopoly and anti-unfair competition measures, enhancing the rigid constraints of fair competition reviews, and comprehensively utilizing capacity control, standard guidance, price enforcement, and quality supervision to tackle internal competition and foster a healthy market ecosystem. The report further mentioned expanding pilot reforms for the market-based allocation of production factors to include more eligible regions.
The government work report proposes accelerating a comprehensive green transition. It emphasizes leveraging carbon peak and carbon neutrality goals to synergistically advance carbon reduction, pollution control, green expansion, and growth, thereby boosting green development momentum. Efforts will include vigorously developing a green low-carbon economy, improving policies to promote green and low-carbon development, implementing actions to enhance quality, reduce costs, and cut carbon in key industries, and advancing the construction of zero-carbon industrial parks and factories. A national low-carbon transition fund will be established to foster new growth areas such as hydrogen energy and green fuels. High-energy-consumption and high-emission projects will be strictly controlled, outdated capacity will be phased out faster, and innovation in green low-carbon technologies and equipment will be supported. The system for total resource management and comprehensive conservation will be improved, with enhanced recycling of renewable resources. The government will also steadily advance carbon peak and carbon neutrality, implementing dual control systems for total carbon emissions and intensity, improving carbon emission statistics and accounting, and expanding the coverage of the carbon emission trading market.
The petrochemical industry is poised for new development opportunities. The phase of purely pursuing capacity expansion in the sector has concluded. With intensified efforts to curb internal competition and accelerate the green transition, smaller players lacking environmental compliance, energy efficiency, and advanced technology will face further constraints. Policy resources are expected to increasingly favor leading enterprises with technological capabilities and scale advantages. Additionally, efforts to address supply chain weaknesses may intensify. There is an urgent need for self-sufficiency in high-end materials currently constrained by external dependencies, potentially leading to policy support and capital investment in areas such as electronic chemicals.
Risks include significant fluctuations in crude oil prices and potential policy implementation shortfalls.
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