1. Improvements in operations
With impacts from the global financial crisis, the operation of the rubber product sector saw a serious downslide in the second half of 2008. Owing to the rapid growth in the first half of 2008, however, the rubber product sector basically achieved a stable development overall for 2008. The industrial total production value was 18.8% higher than in 2007 and the output of major rubber products such as tires grew considerably.
If the development of the rubber product sector in previous years was mainly attributed to investment, consumption and export, there was more support from the policy factor in 2009.
According to statistics made by the National Bureau of Statistics, sales revenues in the rubber products sector totaled RMB418.368 billion from January to November 2009, an increase of 12.3% over the same period of 2008, and the profit was RMB25.655 billion, an increase of 64.71%. In 2009, 655 million pieces of tires were made, an increase of 18.1% (298 million pieces of those being radials, an increase of 14.6 Vo), and 2.00 billion pairs of rubber shoes were produce, a rise of 0.8%. Other rubber products such as conveyor belts, motorcycle tires, rubber hoses, rubber products for vehicles, rubber products for buildings and condoms saw either ups or downs in output. In spite of differences in performances of various rubber products, there was an evident stable and rising trend. The global financial crisis failed to inhibit investors' enthusiasm. After a period of wavering in the first halfof2009, the rubber product sector started to recover and achieved an investment of RMB57.45 billion from January to November, an increase of 32% over the same period of 2008.
2. Overall growth in economic performance
One of the major salient points in the rubber products sector in 2009 was the drastic improvement in economic performance despite low growth and even declines in production. This was true for almost all rubber products. Take tires for instance. According to statistics of the Tire Branch of China Rubber Industry Association covering 44 member enterprises from January to November, output was 7% higher, sales revenues were 4.3% higher and profits were more than 3 times higher than the same period of 2008. The performance growth was related to cumulative effects in recent years such as technical progress, structural adjustments and large-scale production. The major factor was that as international and domestic markets initially suffered violent fluctuations after the global financial crisis, the supply/demand relationship reversely changed, and prices of raw materials fell dramatically. In addition, China increased its export rebate rate several times. Except for tires, the export rebate rate for most rubber products was up to 13%. Policy support was therefore offered to the overall growth of the economic performance in the rubber product sector.
3. Special tariff measure
Special tariff measure with regard to tires was one of the major issues in the sector in 2009. Although a high US tariff temporarily constrained the export of sedan and light truck tires to the United States, the rubber product sector in China will not easily give up the American market. While making further positive responses to the case, some problems are worth pondering. Domestic rubber product sector should identify ways to quickly transform the expansion development mode. While approving new projects at a high technical level, the sector should eliminate outdated production capacity and encourag_e enterprises with technology, strength and market to achieve sound capacity expansion and rational distribution through technical renovation, acquisition and capital operation. Foreign capital importation should be transformed into foreign capacity selection. Equal tax treatment should be given to domestic and foreign-funded enterprises. While caring for the safety of domestic industries, export should not be overlooked so as to guard domestic enterprises against serious losses. In the face of serious trade disputes, a coordinated information exchange and supervision mechanism should be established in the rubber product sector to help enterprises acquire accurate, comprehensive and complete information and make correct decisions to deal with frequent trade friction.
Forecasts
1. Development opportunities
The Chinese government has defined guiding principles for economic development in 2010. The continuation of the automobile sector rehabilitation program and the consumption policy and the recovery of the world economy, in particular, will promote the improvement of the market condition. There will therefore be more opportunities than challenges in the development of the rubber products sector.
Focus should be laid on the expansion of new sectors and new markets and efforts should be made to seek new development opportunities and spaces in new strategic sectors such as express railways, nuclear energy, wind power generation, new materials and electric automobiles. The emerging low-carbon economy requests the rubber product sector to do a good job not only in energy conservation and pollutant reduction but also in technical innovation so as to meet various new market needs.
2. Challenges
In 2009 the rubber product sector failed to recover in export activities. Due to the global financial crisis, downstream demand was slack. There was also serious interference from trade protectionism. The export of rubber products from China therefore declined drastically. Customs statistics show that 270 million pieces of tires were exported from January to November valued at US$6.9 billion, a drop of 7.4% and 8.5% respectively from the same period of 2008; the export volume of conveyor belts was 69 000 tons, worth US$169 million, a drop of 21.4% and 24.4% respectively; the volume of rubber hoses exported was 72 000 tons, for US$257 million, a drop of 15.3% and 14.05% respectively.
Recovery of demand in the international market will likely be a slow process over the next few years. China's surplus capacity for rubber products will become prominent. Because of constraints in export, great quantities of products will have to be sold in the domestic market. The pressure of domestic sales will be increased and unhealthy market competition will likely be triggered. Some experts have doubts over the sustainability of rapid output and sales growth in the automobile sector against the background of the international economic slump. The future development of the rubber product sector will possibly be put in a predicament.
