China's tyre industry registered significant gains during the 11th Five-Year Plan(2005-2010). However, the global economic crisis and the consequent fall in demand have adversely affected the tyre industry leading to losses/fall in profits for tyre companies and idling capacity. However, China expects the demand to pick up in the coming years and is therefore determined to regain the lost momentum in growth and ensure steady growth of the industry during the 12th Five-Year Plan period (2011-2015). In addition to capacity expansion, the 12th Plan also envisages intensive efforts to save energy and reduce emission.

11th Plan achievements

The gross industrial output of China rubber industry increased 178% in 2010 compared with 2005. During the 2005-2010 period, tyre production increased 68%, radial tyre production 136% and tyre export 166% while rubber consumption increased 61%.  In 2010, total tyre production reached 420 million pieces of which radial tyres accounted for 83.33% (350 million pieces). The production during January-July 2011 reached 262 million pieces, with radial tyres accounting for 86.42% (226 million). About 60% of tyre products are sold domestically and another 40% are exported.     
Consumption of NR by tyre companies in China increased by 2.5% in the first half of 2011 and SR by 9.5%. It is estimated that in 2011, China will consume 7 million tonnes of rubber, including 3.3 million tonnes of NR and 3.7 million tonnes of SR.

Impact of global crisis

In view of the global economic crisis and the consequent fall in demand, the China tyre industry is not expected to perform as good as it did in the previous year. The tyre industry's growth rate is expected to fall to 6% in 2011 from 10% in 2010. The high cost of NR and SR  has adversely affected the profitability of the industry. About one-fourth of the tyre companies have suffered losses this year. The average profit ratio is only 3%.

Growth projection

It is estimated that the total demand of tyre will register an average annual increase of 6% and  reach 569.5 million pieces in 2015, including 480 million radial tyres.
As part of its 12th Five Year Plan, China will encourage merger of enterprises to ensure that at least one or two tyre companies enter the Top 10 list of world tyre companies with sales revenue of $4 billion. The output value of the Top 10 Chinese tyre companies accounts for 50% of the total output value. The new policy aims at enhancing the popularity and market share of the Chinese tyre by cultivating famous brands.
The Five-Year Plan proposes to promote production technology to develop and utilise alternative sources of rubber and to replace natural rubber. The plan also proposes to leverage advanced production technology to develop more energy saving tyre as well as high-performace heavy radial tyre and passenger radial tyre.