Chinese Rubber Association Seeks Lower Import Tax

On 22 March the China Rubber Industry Association proposed a cut in import taxes for natural rubber and a build-up in strategic reserves as a way of protecting the sector from price swings. Chairman Ju Hongzhen told Reuters it wanted import tariffs below 12 per cent as higher rubber prices were squeezing margins at tyre makers. Importers of natural rubber now have to pay either a 20 per cent import tax or a flat tax of 2,600 yuan a tonne.

The association predicted Chinese natural rubber consumption will grow 12 per cent in 2007 from 2.1 million tonnes last year. The industry also urged Beijing to create strategic reserves for natural rubber, which could help stabilise the domestic market, particularly if international prices surge.

Beijing used to have strategic reserves of natural rubber. But the market economy over past decades meant government reserves have been replaced by commercial stocks.