Jin Jinrao: It Is Recommended To Cancel The Import Tariff On Natural Rubber

- Mar 08, 2019-

As the representative of the 13th National People's Congress, Jin Jinyu, chief engineer of Yiyang Rubber & Plastic Machinery Group Co., Ltd., on behalf of the rubber tire industry during the “two sessions”, proposed “removing the import tariff on natural rubber and giving appropriate subsidies to domestic rubber farmers”.


Jin Jinyu proposed that the rubber industry is an important part of China's national economy. The total industrial output value of current prices accounts for about 1% of the national GDP, and nearly 2 million employees. China's tire production has ranked first in the world for 14 consecutive years, accounting for 1/3 of global production. Among the top 20 companies in the world tire ranking, there are 4 Chinese companies. China plays an important role in the world rubber industry and is marching towards the world's rubber industry.


However, with the rapid development of China's rubber industry, its most important raw material natural rubber import tariff (currently 20% ad valorem tax or 1,500 yuan / ton of specific tax) has seriously restricted the development of China's tire rubber industry.


Jin Jinzhen believes that China imposes import tariffs on natural rubber for two important reasons: First, the state uses natural rubber as a strategic material; second, the original intention of taxation is to protect domestic natural rubber planting and boost natural rubber prices to protect rubber farmers. interest. However, from the current actual situation, the import of natural rubber import tariffs can not only achieve the above original intention, but also seriously restrict the healthy development of the downstream tire rubber industry. The specific reasons are as follows:


First, the import tariff on natural rubber cannot achieve the purpose of raising the price of natural rubber in China and protecting the interests of rubber farmers.


China is the world's largest consumer of natural rubber. However, the area suitable for planting natural rubber in China is very limited. It can only increase production by increasing yield per mu, instead of destroying tropical rain forests to increase planting area.


According to the Association of Natural Rubber Producing Countries (ANRPC), global natural rubber production in 2018 was 13.794 million tons, an increase of 4.5%. In 2018, China's natural rubber output was 837,000 tons, the highest in history, accounting for only 6% of global production. In 2018, China imported 2.6 million tons of natural rubber, 110,000 tons of composite rubber and 2.95 million tons of mixed rubber, totaling 5.66 million tons. The consumption of natural rubber is about 6.48 million tons, and the dependence on imports is as high as 87%. It is not in the long-term interests of China to impose tariffs on imported natural resources.


In addition, even if the import tariff on natural rubber is helpful to increase the price of natural rubber in China, due to the low production of natural rubber in China, the sales volume is only nearly 10 billion yuan, while the annual output value of the downstream rubber industry is nearly 1 trillion yuan. 100 million yuan, the ratio of the two is very different. Therefore, the import of natural rubber import tariffs has a limited effect on expanding China's natural rubber planting area and price increase, but the damage to downstream tire companies is enormous.


Second, the elimination of natural rubber import tariffs will not reduce too much tariff revenue.


Because the tariffs are too high, tires and other downstream processing enterprises can not afford, so China's annual general trade under the import of natural rubber is rare, enterprises are to adopt the processing mode of import, the country does not receive much natural rubber import tariffs every year.


According to the calculation of the natural trade imported natural rubber (dry rubber) of 40,330 tons in 2018, it only accounts for 20% of the imported natural rubber (dry rubber), and the import tariff is less than 605 million yuan (403,300 tons × 1,500 yuan / ton ). In the past years, the proportion of natural rubber imports by natural trade to natural rubber imports was about 15%. Therefore, the elimination of natural rubber import tariffs will not reduce too much tariff revenue.


To this end, Jin Jinyu put forward three suggestions on behalf of the rubber tire industry:


The first is to abolish the import tariff on natural rubber and give appropriate subsidies to domestic rubber farmers.


The natural rubber planting and tire manufacturing industry is a lip-tooth-dependent upstream and downstream relationship. In order to enable the two industries to achieve win-win development, it is recommended to eliminate the import tariffs on natural rubber and appropriately subsidize domestic rubber farmers.


Natural rubber as an agricultural product, the international practice is to give the rubber farmers a certain subsidy when the price is lower than a certain value. China can refer to Thailand and other countries to give appropriate subsidies to rubber farmers per mu of rubber trees to improve their production enthusiasm. In addition, China's natural rubber production state-owned enterprises account for 50%, and the other 50% belong to private rubber farmers. China's finances can mainly subsidize the use of natural rubber in national strategic materials, which can also greatly reduce the country's fiscal expenditure.


The second is to propose the establishment of a natural rubber commercial storage alliance.


Leading by relevant national departments and rubber industry associations, enterprises actively participate in the formulation of relevant measures to establish a balanced supply and demand and price of natural rubber commercial storage alliance.


The third is to establish a mechanism for joint development of upstream and downstream.


Tire companies and farmers will jointly develop new natural rubber products, improve the quality and added value of natural rubber, and achieve a win-win situation for upstream and downstream industries.


Formulators and technicians from tire companies will cooperate with domestic natural rubber enterprises to improve the performance of natural rubber technology, expand the scope of use and dosage, improve product quality and added value, and enhance the profitability of enterprises.


Tire companies and natural rubber enterprises to strengthen in-depth cooperation, strengthen the linkage mechanism in the field of natural rubber raw materials, product processing, supply chain construction, etc., to achieve common development.


Jin Jinzhen believes that the healthy development of an industry must be inseparable from the harmonious and healthy development of the upstream and downstream. It is hoped that the state can abolish the import tariff on natural rubber and promote the transformation of China's rubber industry from large to strong.