Trade barriers increase Chinese tires hit the wall

In the first half of 2009, a tyre rolled out a different track from the past, and determining the direction of export has become a difficult issue.

Data show that the tire industry's export decline from January to April is 26% -29%, a decline of about 16% in May-June.

This trajectory also reflects the economic trajectory of the national oil and chemical industry in the first half of the year. Under the double attack of weak demand and increased trade barriers, the China petrochemical industry has already been in crisis.

On July 27, the China Petroleum and Chemical Industry Association announced the latest industry data. In the first half of the year, the total import and export volume of the entire industry was 136.267 billion U.S. dollars, down 36.5% year-on-year. Among them, the total value of exports was 43.558 billion U.S. dollars, a year-on-year drop of 32%, showing a continuous downward trend.

What worries Feng Shiliang, deputy secretary-general of the China Petroleum and Chemical Industry Association, is that international trade protectionism continues to rise. "Recently, the European Union, Japan, the United States and other countries and regions are raising or preparing to raise technical trade barriers for China's petrochemical products, which should arouse our great attention."

Increased trade barriers

As one of the representative industries of the petrochemical industry, the tire industry is suffering from the deterioration of the export market.

Fan Rende, president of the China Rubber Industry Association, pointed out that China's tire exports have fallen by a large margin from January to June this year, and the export situation is not optimistic.

But the export market is crucial to the entire tire industry and can even be described as a lifeline.

In 2008, China's tire exports accounted for 63.8% of the total output, accounting for 42.8% in the first five months of this year. It is one of the industries that rely most on foreign markets.

With the outbreak of the U.S. tire insurance program in China, this fragile lifeline is in jeopardy.

On June 29th, the United States International Trade Commission (ITC) made relief measures on the tire special security case and recommended that Obama implement a three-year special tariff on imported Chinese tires (Chinese passengers and light truck tires are added for three consecutive years. 55%, 45% and 35% of ad valorem special tariffs).

At present, the Ministry of Commerce is actively negotiating with the United States, lawyers are preparing for defense, and the China Rubber Industry Association is in contact with the United States Importers Association, to deal with the grim situation.

At the same time, the United States Tire Industry Association has also sent a letter to President Barack Obama requesting the veto of ITC's tire special protection case.

On the afternoon of July 17, the person in charge of the Fair Trade Bureau of the Ministry of Commerce stated in a statement that the ITC reported that “fact-finding errors and lack of logic are not sufficient as a basis for restricting Chinese tires”.

However, the tire export market has indeed been in a critical situation. Before the United States filed a special case for Warburg, Brazil also filed anti-dumping lawsuits against Chinese tires.

The difficult situation of the tire industry is the epitome of the increase in the export trade barriers of the entire petrochemical industry.

In the first half of the year, the export volume of basic chemical raw materials decreased by 34.1% year-on-year, chemical fertilizers decreased by 74.7%, pesticides decreased by 34.7%, paints and pigments decreased by 32.1%, rubber products decreased by 31.2%, and synthetic resins decreased by 39.7%.

The rise of international trade is becoming one of the biggest problems in China's petrochemical industry. Since the beginning of this year, there have been 15 investigations initiated by foreign countries on “two anti-two anti-two guarantees”. In addition to the China Tire Survey, the United States also launched a counter-dumping investigation into Chinese citric acid and citrate. Even developing countries such as India and Pakistan have launched investigations on soda ash and other products.

Liu Danyang, deputy director of the Bureau of Fair Trade of the Ministry of Commerce, pointed out that the amount of special safeguard measures initiated by the United States on Chinese tires this year was as high as US$2.2 billion. This year, the number of trade frictions encountered by China's foreign trade and the amount of money involved are all unprecedented.

Weak demand

Behind the increase in export trade barriers, the overall demand for foreign petrochemical products shows a weak reality.

Feng Shiliang pointed out that the weak demand in the world market directly affects the export of petrochemical products in China, especially in industries where the external market is highly dependent (such as rubber products, inorganic raw material manufacturing, fertilizers, etc.), and these industries all require certain export balance. Production in order to ease the contradictions of the relative surplus of production capacity.

Now, whether this part of the originally exported products can be released domestically is also questionable. The apparent domestic consumption of some major varieties is still declining.

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