China encourages foreign investment in the tyre industry

Recently, the National Development and Reform Commission and the Ministry of Commerce released the “Catalogue of Industries for Encouraging Foreign Investment (2020 Version)”. The Chinese government hopes that foreign businessmen will invest in the industries listed in the document. The trade encouragement catalogue currently in use in China was released in 2020, and the 2022 version will come into force on 1 January 2023.

Tyrepress notes that for the tyre industry, the 2022 version of the “Encouragement Catalogue” removed two items: “Manufacture of Waste Tyre Comprehensive Utilisation Devices” and “Manufacture of Four-Drum and Above Radial Tyre Building Machines”. Meanwhile, the Encouraging Catalogue 2022 retained three items related to the tyre industry chain, including “Large Airliner Tyres”, “Tyre Noise Test Lab”, and “Tyre Pressure Monitoring System (TPMS)”.

In addition, the “Encouraging Catalogue 2022” also lists the profitable industries in some regions of China. 13 provincial-level areas encourage foreign businessmen to invest in the tyre industry within their jurisdictions, including Liaoning, Jilin, Heilongjiang, Anhui, Jiangxi, Henan, Hubei, Hunan, Guangxi, Hainan, Chongqing, Sichuan, and Ningxia.

The industries these provinces want to promote are: tubeless radial truck tyres, radial passenger car tyres (above 15 inches, including run-flat and low profile), aircraft tyres and agricultural radial tyres.

At a press conference around the time of publication, a spokesperson for the Ministry of Commerce said that foreign investment in the industries included in the Encouraging Catalogue could mainly enjoy three preferential policies. First, when the investors import equipment for self-use within the total investment amount, the equipment will be exempted from tariffs (except for products that are not exempted by the state). Second, the local authorities will give investors priority in supplying land under certain conditions and will provide particular preferential treatment in land prices. Third, foreign businessmen investing in China’s western region and Hainan Province can further reduce the corporate income tax at a rate of 15 per cent.