The Hengli Group behemoth

Something weird happened to a textile company out of Suzhou called Hengli (恒力) in 2017-18. Suddenly, bad things stopped happening to it. Instead, financing flooded in, the regulators OK-ed its restructuring plan, and hard-to-obtain licenses for new businesses fell like manna from the heavens.

Fast forward to today and the Hengli behemoth is unrecognizable. It runs China’s largest private petrochemical refining base up in Dalian. No teapot them. If that wasn’t enough for ten year’s effort, it’s also built one of the world’s largest ship construction businesses. Talk about vertical integration: the Hengli Group can now ship in oil, crack it into chemicals, spin and weave the fibers, manufacture the clothes et al. and then ship it all back out into the world on its own vessels.^[1]

This is one private firm which has gone from strength to strength under this administration. At the very least they must have a great government relations team.

Hengli began life as a state-owned weaving factory in Suzhou, which was bought out by an entrepreneurial couple, Chen Jianhua (陈建华) and Fan Hongwei (范红卫) in 1994.^[2] Officially they remain in control – making them together worth USD 15bn-ish.^[3]

After surviving the Asia Financial Crisis, Hengli grew strongly in the 2000s, adding spinning facilities, and beginning to move upstream into chemical fibers. They expanded even faster during the stimulus that followed the 2008 financial crisis. And then in 2010, Hengli decided it needed to move even more upstream, into PTA, a key input of polyester.^[4] And so began the refining project on Dalian’s Changxing island.

That required a big investment, and the early years were tough, with large losses.^[5] In 2016, they failed to list on the Shanghai stock market, and Chen was reportedly taken away briefly for questioning.^[6] In 2017, after buying a listed shell company, Chen and Fan tried to restructure the business and raise more financing, but the regulators were not happy, given the firm’s losses.^[7] They sent Hengli’s proposal back to management multiple times.

But in 2018, the plan was approved^[8], and then it was off to the races. In April of that year Hengli became the first private firm to get a license from the National Development and Reform Commission (NDRC, 国家发展改革委) to use imported crude oil. That was a rare treat. And its Daxing refinding base expansion was funded by a syndicated loan led by China Development Bank, again a sign of favour from above. Both the petrochemical and ship businesses have very high debt levels, unsurprisingly given both involved a lot of fixed asset investment.^[9] But no one in Beijing is telling them to delverage.

It now operates a massive 20m tons-a-year gasoline, diesel, jet fuel and paraxylene (PX) processing complex there, with various high‑performance resins and polyester being added over time, in Dalian and elsewhere.^[10] It’s one of the largest polyester producers globally.

Then came the ships. In 2023, Hengli bought out the shipbuilding assets of bankrupt SPX, a Korean firm, in Dalian. It got lots of support from the Dalian city and Liaoning province governments, everyone being very keen to live up to Xi Jinping Thoughts on China becoming a great maritime power.^[11] It also got the sign-off from the regulators to inject these assets into another listed company.^[12] Orders have flooded in for ships since, after the Group kicked orders off with ships for its own use.

In May this year, Hengli’s run of luck seemed to run out. Not only did the oil price shoot up with the war, but the US Treasury sanctioned its refinery business for processing Iranian oil.^[13] Beijing was so annoyed it triggered, for the first time, its 2021 law^[14] ordering non-compliance with those sanctions.^[15] Hengli’s been restructuring the business, shutting down its Singapore trading arm, to avoid the worst impact. But with the, err, apparent end of hostilities in the Hormuz Strait and Iranian oil flowing again, maybe those problems are now over.

The oil storm may have also refocused the company on a coal-to-chemical (effectively, coal-to-polyester) project it agreed to build in Yulin City in Shaanxi province, which it agreed in 2020 but which appears to have stalled.^[16] Instead, Shaanxi coal has built other large coal-to-chemical projects here.^[17] (Yulin has some interesting revolutionary history: Xi Zhongxun (习仲勋) oversaw the liberation of the city in 1949.^[18])

Hengli really has done well – and even the People’s Daily et al. sings its praises.^[19] All in all, it’s been quite a run of luck and entrepreneurial success, apparently.

^[1] Or as the group itself says, its integrated supply chain links ‘crude oil—aromatics, ethylene—purified terephthalic acid (PTA), ethylene glycol—polyester (PET)—civilian and industrial yarns, engineering plastics, biodegradable new materials, and films—textiles.’

^[2] ‘恒力集团有限公司 [Hengli Group Co., Ltd.]’, Baike Baidu [百度百科], https://baike.baidu.com/item/恒力集团有限公司/6353248.

^[3] ‘Hengli, China’s Silk-to-Petrochemicals Empire, Faces the Chill of US Sanctions’, The Business Times, 22 May 2026, https://archive.ph/9wSq7, https://www.businesstimes.com.sg/companies-markets/energy-commodities/hengli-chinas-silk-petrochemicals-empire-faces-chill-us-sanctions.

^[4] ‘八千亿恒力的三次顺势与三次逆流 [Hengli Group’s RMB 800bn Three Times of Riding the Wave and Three Times of Facing Adversity]’, China News [中国新闻网], 8 September 2025, https://archive.ph/R2Uz0, https://www.chinanews.com.cn/cj/2025/09-08/10478467.shtml.

^[5] Zhang Xiaomin, ‘Hengli Helps Revitalize Northeast China’, China Daily, 25 June 2024, https://archive.ph/dljV2, https://global.chinadaily.com.cn/a/202406/25/WS667a194da31095c51c50a9ec.html.

^[6] Wei Du [魏度], ‘恒力股份核心项目尚处投建期 存货猛增128亿 [Hengli Petrochemical’s Core Projects Are Still under Construction, and Its Inventory Has Surged by 12.8 Billion Yuan.]’, Sina Finance [新浪财经综合], 29 April 2019, https://archive.ph/PIABd, https://finance.sina.com.cn/roll/2019-04-29/doc-ihvhiqax5631896.shtml.

^[7] ‘恒力股份回应“有毒收购”：标的资产能扭亏 [Hengli Petrochemical Responds to “Toxic Acquisition”: Target Asset Can Turn Around]’, Caixin [财信], 15 February 2017, https://archive.ph/UsnAZ, https://finance.caixin.com/2017-02-15/101055633.html. ‘恒力股份实控人承诺疑“变味” 巨亏资产溢价对冲业绩承诺？ [Hengli Petrochemical’s Controlling Shareholder’s Promises Suspected of “Going Astray”: Is the Injection of Loss-Making Assets to Offset Performance Commitments?]’, Jiemian News [界面新闻], 16 March 2017, https://archive.ph/cLjso, https://m.jiemian.com/article/1175950_camcard.html.

^[8] Chen Zhiqiang [陈志强], ‘恒力股份配套融资近72亿助力炼化项目 [Hengli Petrochemical Raises Nearly 7.2 Billion Yuan to Support Refining Project]’, China Securities Web [中国证券网], 12 April 2018, https://ggjd.cnstock.com/company/scp_ggjd/tjd_bbdj/201804/4209487.htm.

^[9] ‘恒力集团的资本图解 [A Capital Overview of Hengli Group]’, Beijing Business Daily [北京商报], 2 September 2025, https://archive.ph/vc2Vs, https://finance.eastmoney.com/a/202509023502649696.html.

^[10] ‘The Profit Is Amazing!Hengli Petrochemical Plans to Invest in Four Major Projects Including Polyester Film for 24.2 Billion Yuan’, iMedia, 25 June 2026, https://min.news/en/economy/cc3e0fc96a2674bf66b350d5d0f83592.html.

^[11] 巨资扩建！赴港上市？民营巨头欲打造世界一流船厂 [Massive Expansion! Hong Kong IPO? Private Giant Aims to Build World-Class Shipyard], 16 August 2025, https://archive.ph/dhOJF, https://www.sohu.com/a/801345284_155167.

^[12] ‘恒力重工借壳上市获批！剑指“民营造船第一股”！ [Hengli Heavy Industry’s Backdoor Listing Approved! Aiming to Become the First Private Shipbuilding Stock!]’, MNavigation [航运星球], 17 May 2025, https://archive.ph/ogrmj, https://caifuhao.eastmoney.com/news/20250517000835886623590.

^[13] Husband, Wife behind Sanctioned China Energy Giant Hengli Group Lose $1.78 Billion, 28 April 2026, https://archive.ph/CNPWg, https://www.straitstimes.com/asia/east-asia/husband-wife-behind-sanctioned-china-energy-giant-hengli-group-lose-us1-4-billion.

^[14] China Adopts Measures to Counter Foreign Laws Banning Transactions With Chinese Firms, 22 January 2021, https://perkinscoie.com/insights/update/china-adopts-measures-counter-foreign-laws-banning-transactions-chinese-firms.

^[15] ‘China’s Commerce Ministry Blocks US Sanctions against Five Refineries’, The Straits Times, 2 May 2026, https://archive.ph/NPKwG, https://www.straitstimes.com/asia/east-asia/chinas-commerce-ministry-blocks-us-sanctions-against-five-refineries.

^[16] Chen Aizhu, China’s Hengli Makes Bold $20 Billion Bet to Spin Coal into Fabric, 29 July 2020, https://archive.ph/0JQTA, https://www.reuters.com/article/business/chinas-hengli-makes-bold-20-billion-bet-to-spin-coal-into-fabric-idUSKCN24U0M9/.

^[17] ‘Shaanxi Coal’s 62bn Yuan Projects Enters the Comprehensive Construction Stage’, Seatao, 11 January 2026, https://archive.ph/NEPhU, https://www.seetaoe.com/details/256458.html.

^[18] 习仲勋 [Xi Zhongxun], February 2015, https://archive.ph/Og5lN, https://www.yldsyjs.com/article/140.

^[19] ‘恒力集团获中央媒体集体点赞：以产业报国助力中国式现代化与海洋强国建设 [Hengli Group Receives Collective Praise from Central Media: Serving the Country through Industry to Contribute to China’s Modernization and the Construction of a Maritime Power]’, Hengli Group WeChat Official Account, 7 August 2025, https://js.ifeng.com/c/8lctNaxofnG.