China, in its ongoing trade war with the US, has signalled to other countries that it is willing to offer concessions that could help Bejing to tip the balance in its favour in the dispute. As part of this strategy, Chinese Premier Li Keqiang signed a memorandum of understanding (MoU) with world's largest chemical firm BASF to set up a $10 billion chemical plant in Zhanjiang, Guangdong province. The unique aspect of the deal is that BASF will completely own the plant, something that is rare in a sector monopolised by the Chinese government.
The South China Morning Post reported that the complex could employ 2,000 people plus offer jobs to 1,000 external contractors. The complex which will be the chemical giant’s third-largest plant in the world is expected to be completed by 2030. The complex will produce up to one million tonnes of ethylene per year. The unique thing about the deal is that China has allowed the plant to be completely owned by BASF, something that is rare in a sector monopolised by the government.
Hitherto China’s policy of forcing joint ventures between companies along with technology trafers has been one of the main disagreement points between it and the US. The deal is seen as win-win for both Germany and China against the US. This will likely see Germany and China coming closer on issues like trade dispute, World Trade Organisation and protectionism, especially by the US.