Divergent growth trajectories in China’s chemical industry: the case of the newly developed industrial parks in Shanghai, Nanjing and Ningbo

Abstract

In the late 1990’s, the “new-economy” industries in China proved to be relatively vulnerable and were strongly hit by the financial crisis in Asia. As a result, a new economic support policy was introduced in China’s Yangtze Delta region, which put greater emphasis on the support of traditional industrial sectors, including the chemical industry. This paper investigates the effects of the growth of this industry, as well as the potential and current problems emerging from new growth paths. It compares the growth of three newly developed chemical industry parks in Shanghai, Nanjing and Ningbo. The paper is based on an institutional perspective of clustering processes arguing that regional industrialization is subject to formal and informal institutions which shape the growth paths and contribute to divergent regional trajectories. Although these industrial parks all benefit from the general economic upswing in China, their development is influenced by different business models, economic contexts, goals and strategies, leaving room for divergence and specialization. Due to the existing structure of operations, these parks have a great deal of potential but also face substantial challenges, such as the establishment of internal networks and close customer linkages. It is argued that this might limit their innovative capability in the future. Furthermore, their growth prospects differ depending on future government policies.