German specialty chemicals company Lanxess AG is committed to adapting to the changing market demands in China to meet the country's growing need for specialized, localized and value-added products, its top executive said.

"The Chinese market is not just another market for Lanxess. It holds strategic significance for our global operations," said Matthias Zachert, CEO and chairman of the board of management of Lanxess AG.

Zachert said he expects the Chinese chemical market to achieve moderate growth this year rather than a strong rebound, before the industry's growth rate accelerates in the next two years.

"I believe the entire chemical market in China, the world's second-largest economy and also the largest chemical industry globally, will continue to grow," Zachert said.

Last year, the chemical industry faced numerous challenges globally, and China, as the world's largest chemical market, was no exception.

According to data from the National Bureau of Statistics, in 2023, the chemical sector of the domestic petrochemical industry achieved operating income of 9.27 trillion yuan ($1.28 trillion), a year-on-year decrease of 2.7 percent.

However, China's petrochemical sector also showed signs of stability and recovery last year despite rising global uncertainties, according to Fu Xiangsheng, vice-president of the China Petroleum and Chemical Industry Association.

The output of China's petrochemical sector, together with the trade volume of petrochemical products, rose in 2023 amid an intricate landscape, laying the groundwork for robust prospects in 2025, he said.

While Lanxess' business in China was also affected last year due to slowdowns in downstream sectors such as construction and electronics, Zachert said he expects China's construction sector — an important downstream market of the chemical industry — to resume its growth trajectory in the next two to three years after undergoing an adjustment period.

Amid China's sharpening focus on developing new quality productive forces and promoting high-quality development, the company will continuously seek opportunities in the nation, he said.

China's emphasis on the significance of expanding high-standard opening-up provides a boost of confidence for foreign businesses such as Lanxess, said Lin Boqiang, head of the China Institute for Studies in Energy Policy at Xiamen University.

With chemical products demand in China expected to continue growing along with its economic recovery, multinational chemical corporations have continued to prioritize downstream assets in the country, Lin said.

As China has shifted to high-quality development, focusing on sustainability, innovation and digitalization, the sustainability-focused specialty chemical company sees a lot of opportunities to contribute, he said.

China currently represents 40 percent of global sales of chemical products. Eyeing the potential opportunities, Lanxess launched its Asia-Pacific Application Development Center in Shanghai three years ago to expand its local innovation capacities.

"The center enables us to lead Lanxess into a future that is not only profitable but also sustainable and innovative in China," said Zachert.

"China's role in the chemical market has evolved from being primarily a manufacturing hub to a significant consumer market. It accounts for 40 percent of global chemical sales, which is expected to approach 50 percent by 2030," he said.

"This market shift has led Lanxess to localize products to meet the demands of China's growing middle-income group."