IngentaConnect Global Market Integration and China's Rubber Industry: Challenges...

Abstract:

This paper, while reviewing the development and growth of the rubber production sector in China from a historical perspective, discusses the major challenges confronting the sustainable growth of rubber-based industries in the era of global market integration. The challenges arise from the growing shortage of resources (both natural and synthetic rubber) against the fast-growing automobile and tyre manufacturing industries. While the dynamic growth of the rubber industry in the pre-reforms era was achieved under a heavy import-oriented trade policy regime, the sustaining of the same is fraught with serious challenges in the context of market integration. Following a comprehensive analysis of the development of the rubber industry in retrospect, this paper suggests some important policy options for carrying forward and, thereby, sustaining the growth dynamism of the industry in the country in the emerging scenario. It emerges from the study that the sustainable growth of the rubber-based industry in China calls for a thorough revamping of state policies and devising new institutional development strategies covering a broad spectrum of activities, including: (a) demand and supply management; (b) redefining the status of natural rubber as a strategic commodity and industrial raw material; (c) restructuring the production sector favouring smallholder producers; and (d) R&D investments facilitating rubber expansion to agro-ecologically suitable areas. Given that global market integration would continue to stimulate the growth of the domestic rubber industry, this paper highlights that issues at the production sector are to be tackled on a priority basis. However, this would need China to make a rational choice between one or a combination of alternatives, including: (a) strengthening the existing domestic natural rubber production sector; (b) continue with the prevailing natural and synthetic rubber import policies; (c) increased substitution between natural and synthetic rubber; and (d) strengthening rubber investment programmes (including domestic and foreign direct investment) in neighbouring countries, namely, Laos, Vietnam, Cambodia, Myanmar and the Philippines.

Keywords: RUBBER INDUSTRY; ECONOMIC INTEGRATION; NATURAL RUBBER; SYNTHETIC RUBBER; TYRE INDUSTRY; RUBBER GROWERS

Document Type: Research article

DOI: 10.1163/156853108X364235

Affiliations: 1: Gujarat Institute of Development Research

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Global Market Integration and China's Rubber Industry: Challenges and the Way Forward