China's steadily increasing demand for natural rubber over the
last few years, which?was?fueled by the rapid development
of the automobile manufacturing industry, has made the country the
world's second largest tire producer and exporter since 2003.
International giant tire producers such as Michelin, Bridgestone
and Goodyear have made significant investments in China adding to
the demands on the natural resource.
As the world's largest natural rubber consumer and importer,
China used 1.8 million tons of rubber in 2004, 21.5 percent of the
total global volume. From 1999 to 2004, the volume of China's
consumption increased 80 percent and import volumes doubled.
However, China can only produce 7 percent of world's total
volume of natural rubber. The production area of natural rubber is
6.3 million mu (420,000 hectares) with a recorded
560,000-ton-output in 2004. At full capacity, the three main
production provinces of Hainan, Yunan and Guangdong, can only churn
out about 700,000 tons, leaving a yearly shortfall of 1.1 million
tons. China's production of rubber for domestic use fell from 60
percent in 1999 to 30 percent in 2004. According to Lei Yongjian,
vice director of the Guangdong Provincial Farm, the rate of
production for domestic use will continue to drop, falling below 20
percent within a couple of years.
The accelerated industrialization in Thailand, Indonesia and
Malaysia?-- three of the world's major runner
producers?-- has actually curbed rubber export growth in
recent years.
They therefore established the International Tri-Partite Rubber
Corporation (ITRCo) in 2002 to regulate rubber sales and stocks in
the three countries. They adopted policies on supply management,
export reduction and setting up joint ventures to control the
natural rubber market and stabilize prices. The target price for
2004 was US$1,100 per ton. This year it's US$1,981 per ton. Vietnam
and India have expressed interest in joining the corporation.
China, however, is not a party to the ITRCo. If major changes
take place on the international market, China could be faced with
severe challenges in the areas of economy and defense security.
According to Lei, with its limited natural rubber and synthetic
rubber resources, China should adopt the "go-out" strategy to
establish overseas natural rubber production bases to enhance its
competitiveness for global resources.
Furthermore, by establishing overseas bases, China can avoid
trade barriers set by major producing countries and acquire the
latest technologies of rubber production to strengthen its position
on the international playing field.
However, there is a bumpy road ahead if Chinese corporations are
to adopt the "go-out" strategy. This would be due to unclear state
guidelines and support for development of the industry.
Industry insiders have suggested that government guidelines need
to be developed, and implemented by the industry. Further, a plan
regarding the establishment of overseas natural rubber production
bases should be included in the framework of agriculture
cooperation between China and the country where the bases are to be
located. This would enhance administration by relevant departments
and support from the partner country.
The state should also invest in strategic agriculture resource
projects and offer discounts on all or some loans to lessen the
risks. Experts also suggest removing tariffs and import value added
taxes for rubber production manufactured in these overseas
bases.
(Xinhua Daily Telegraph translated by Li Shen for
China.org.cn, December 8, 2005)