Sustainable Growth of China's Rubber Industry in the Era of Global Economic Integration

Abstract

The article analyses the development and growth of the rubber industry in China since the reforms began. It reflects the contradictions arising from the mismatch between growing shortage of rubber vis-à-vis the dynamic and spatial growth of rubber-based industries. The article suggests some important policy options for sustaining the growth dynamism of the rubber industry in China, in the era of economic integration, which calls for a thorough revamping of state policies and evolving (virtually non-existent) institutional intervention strategies addressing a broad spectrum of activities, namely (a) demand and supply management; (b) redefining the status of natural rubber as a strategic commodity and potential industrial raw material; (c) strengthening property rights status of the rubber small producers; and (d) capital investment for research and development (R&D), facilitating the expansion of natural rubber (NR) cultivation to non-conventional areas. Given the fact that the global market integration would continue to stimulate the growth of the domestic rubber industry, the article highlights that the issues at the supply side management are to be tackled on a priority basis. However, addressing the supply side management issues would need China to make a rational choice between, or a combination of, at least four alternatives, namely (a) strengthening the domestic rubber production sector, particularly, NR; (b) continue to import NR and synthetic rubber (SR) from neighbouring countries; (c) invest in NR plantation development programmes in Laos, Vietnam or Myanmar with the involvement of foreign capital; and (d) exploring feasibility of enhanced substitution of NR with SR. The article also brings out the need for achieving synergy between development of natural rubber sector and rubber-based industrialisation processes in the country, so as to make the industry economically sustainable and globally competitive.

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