When the import of natural rubber resources is limited
At the 2008 China Rubber Market Development Forum and the recently concluded "Two Conferences," the future of the rubber industry has been a central topic of discussion among many participants. Particularly, the growing concern over the scarcity of natural rubber resources in China has raised a sense of urgency across the sector. This year, the call to reconsider the classification of natural rubber as an import commodity under processing trade—arguing that it is unreasonable—has once again gained traction. The focus remains on the high tariffs imposed on natural rubber imports, which continue to be a major barrier for the industry.
Currently, China consumes over 2 million tons of natural rubber annually, but domestic production only meets around 600,000 tons, leaving the self-sufficiency rate below 30%, a level considered unsafe. Since joining the WTO, the share of natural rubber imports in total consumption has consistently hovered around 70%, rising from 75.6% in 2007. Based on past production trends and the “Eleventh Five-Year Plan,†the import volume is expected to increase by about 100,000 tons per year over the next five to ten years. The proportion of imported rubber is unlikely to change significantly, and according to estimates from the International Rubber Research Organization, the gap could reach 2–3 million tons by 2020. This shortage poses a serious threat to the healthy development of the rubber industry, especially since tire production, particularly radial tires, heavily depends on natural rubber. As demand grows, so does the pressure on raw material costs and supply chain stability.
Despite the critical need for natural rubber, it is also considered a strategic resource. In 2007, selective tariffs were introduced for natural rubber imports, but the adjusted rates—ranging from 10% to 20%—still failed to ease the burden on manufacturers. With limited domestic supply and low potential for growth, the industry faces a dilemma: how to meet rising demand without increasing reliance on costly imports?
In this context, imported natural rubber appears as the most immediate solution. However, maintaining a 20% tariff would only worsen the supply issue, potentially driving up costs and stifling growth. Meanwhile, compound rubber has emerged as an alternative, with its import tariff from ASEAN at just 5%. This product, once considered a “three-no†commodity (no definition, no standard, no testing body), has seen rapid growth in import volumes. In 2006, the China Rubber Industry Association developed self-regulatory standards, and the Ministry of Commerce recommended these to national standards, giving the industry more clarity and structure.
While compound rubber offers some relief, it is not a long-term solution. Lowering import tariffs on natural rubber would better address the resource shortage and support sustainable industry growth. The debate over compound rubber may eventually subside, but the underlying issues remain urgent.
Another challenge lies in the processing trade. Recent restrictions on re-exporting rubber products have sparked controversy, with reduced export tax rebates affecting companies significantly. Reports suggest that processing trade for rubber products might soon face tighter controls, which could further disrupt the entire industry. For example, one large tire company reported a profit loss of 100 million yuan in 2007 due to rising raw material costs, reduced tax rebates, and currency appreciation.
To cope, companies have had to raise prices, but market resistance is limited. Export restrictions have also increased pressure on the domestic market, while sluggish sales have strained liquidity. These challenges have indirectly affected investment in R&D and product upgrades. Natural rubber supply is the foundation of the rubber industry’s value chain, and it is crucial for policymakers to engage closely with industry leaders to find effective solutions through rational resource use.
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