CHINA'S chemical industry is forecast to continue double-digit growth in the next few years as the nation's economy and industrial base carries on expanding, KPMG said yesterday.

The industry grew 16.5 percent last year when the economy surged 10.3 percent. As the government has set a gross domestic product growth target of 7 percent a year in the 12th Five-Year Plan (2011-15), the chemical industry could grew 10 to 15 percent annually over this period, Norbert Meyring, a Shanghai-based partner at the audit, tax and advisory firm, said yesterday.

The industry, comprising more than 33,000 enterprises, last year beat the US in terms of output value for the first time.

KPMG said recovery among major Western economies had softened during this year's second and third quarters, and many chemical industry executives are considering the possibility of a double-dip recession in the US and Europe.

The firm said the effect on China's chemical industry of such events as the downgrade of US sovereign debt last month, and the debt crisis in the European Union is hard to predict. But, it noted, the Chinese economy is now more balanced - for example, less exposed to export activity - than before the global recession, enabling the industry to cope better with fluctuations in global market dynamics.

Meyring also said there is a new wave of consolidation in China's chemical industry.

Foreign chemical companies are looking for suitable targets, typically smaller-sized specialty chemicals makers, and political opposition is not seen as a barrier to acquisitions, unlike the more regulated energy market, said KPMG.