ERJ staff report (DS)
Beijing - As prices of natural rubber increase, China's Rubber Industry Association (CRIA) has once again called for import tariffs to be abolished.
A long report published on the CRIA website says the justification is that 80 percent of NR used in China is imported, and prices of NR have increased sharply in recent years.
The report says that NR costs represent around 40 percent of tyre production costs, and notes that a sharp slowdown in volume growth and export volumes and profits in the tyre industry coincided with the sharp increase in NR prices.
NR tariffs are currently around 20 percent. The report said China imported around 2.1 million tonnes of NR in 2011, which yielded around $1600 million in import taxes. This tax burden makes the Chinese tyre industry less competitive in global markets. When this extra tariff is combined with import tariffs on tyres coming from China to many key export markets, the industry is doubly penalised, claimed the CRIA.
Because of this double tax penalty, the CRIA argues that much-needed restructuring in the industry is being held up due to lack of financial resources and lack of incentive.
The CRIA further argues that rubber compound carries a zero import tariff rating, and this encourages many businesses to import NR-rich compound from overseas, in order to reduce the overall cost to the enterprise. Imports of rubber compound accelerated from around half a million tonnes in 2008, to over 1 million in 2009.
CRIA said, â€œNatural rubber is a strategic material, the state should improve the national reserves of natural rubber adjustment mechanism, and to expand the reserves of natural rubber. It adds, 1n 2011, China's natural rubber consumption reached 3.2 million tons and is expected to reach 5 million tons in 2015, accounting for more than 30 percent of the world's natural rubber production."
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News report on CRIA website Chinese language
auto-translated into English (from Chinese)