China is obsessed with setting the pace for the world to follow. Except that its stock market failed to pack a punch.
The Shanghai Composite fell 15 per cent in 2010 and remained in the shadow of its more spectacular cousins, the vibrant commodities markets.
Will China retain its prominence in the global commodity vortex in 2011, or will its significance shrink with the expected recovery of US and Europe? Or does China have hidden factors up its sleeve?
Analysts have been floundering between boom and bust forecasts for commodities in 2011, largely driven by the Chinese government's decision to put the brakes on unbridled growth in the next five years. Planners' intention to shift from a "growth at any cost" model to a more high-value driven economy has already stalled some of the best commodity market rallies late last year.
But calls for restraint cannot dampen optimism. The world economy will rest on policy makers of China and the surprise this year could be the silently emerging sector of coal-to-chemicals. This could in all probability affect the petrochemical and energy commodity graphs in the long run.
Substitute for oil
Coal to chemicals uses coal as raw material instead of crude oil, and requires new-generation technology to turn it into gas, liquids, solid fuels and other chemical products.
The latest developments in China have seen the production of coal-to-liquids, coal-to-dimethyl ether, coal-to-olefins and coal to SNG throughout 2010.
The Chinese coal chemical industry has a massive head-start. It is backed by intense government interest, laps up new generation technology from Western multinationals and promotes an entirely new usage pattern for coal.
The rising price of crude oil has rendered coal a favourite alternative to polyolefins, which is in short supply in China.
In a country that needs to import one-third of its crude consumption, oil is a strategic resource, and shifting to coal in the petrochemical sector is a much needed alternative.
From the cost perspective, coal to chemicals enjoys an obvious advantage as oil is four times as expensive as coal. Developing coal to chemicals is an inevitable choice in China, a nation characterised by "insufficient oil, little gas and ample coal".
China has experienced the world's fastest growth in recent years as a producing and consuming country of polyolefins. As prices of imported oil climbed over the past decade, Chinese chemical makers began using domestic coal to make olefins through a route that starts with coal gasification.
Three Western companies — Total Petrochemicals, Celanese, and Dow Chemical - are advancing their cutting edge technology in coal chemicals to China, lured by the country's ample supply of coal.
August 2010 was a landmark time when the first of China's major coal-based chemical projects started trial operations, spearheaded by the Shenhua Group. Methanol was fed at coal giant Shenhua Baotou's 600,000 tonnes a year methanol-to-olefins plant in Inner Mongolia. The unit can produce 300,000 tonnes a year each of ethylene and propylene.
The Shenhua Baotou unit is said to be the first large-scale demonstration plant for this technology in the world. A downstream polyethylene (PE) and polypropylene (PP) units is expected to start soon.
Shenhua Group, the parent of the world's most valuable coal producer, China Shenhua Energy, aims to raise the output of the plant that converts coal into liquid fuel threefold by end-2015.
Another of China's coal giants, the Datong Coal Mine Group, plans to target new energy-petrochemical development with a 450,000 tonnes a year methanol-to-propylene and PP project.
Successful operations at these plants are likely to trigger a fresh wave of coal-to-chemical projects in Western China - a target of its 12th Five-Year Plan.
The writer is a freelance journalist based in China.