Report on the Work of the Government to affect tire industry deeply

The First Session of the 13th National People Congress was held on Mar. 5 in Beijing.

The Prime Minister Li Keqiang delivered the Report on the Work of the Government.

The following information is of significant importance for the development of China’s tire industry.

Stricter environmental protection law enforcement will be necessary

According to the Report, Chinese government further fight against the pollution in 2018.

It aims to reduce the emission of sulfur dioxide and oxides of nitrogen by 3% and further reduce the density of PM2.5 in key areas.

Meanwhile, the Chinese government will implement the ecological damage compensation mechanism and improve the ecological compensation mechanism.

All these make stricter environmental protection law enforcement a necessary, which will lead to significant impact on tire producers.

Take Dongying of Shandong province as an example, the city enhanced punishment over the issue of starting construction or operation without fully passing the environment evaluation.

In the first half of 2017, some large enterprises were fined 50,000 yuan to 100,000 yuan for the issue.

The latest news show that tire producers have such issues are ordered to suspend production and the penalty has been raised to 200,000 yuan.

Private tire producers see opportunity

Tires were strategic materials of the state two decades ago.

Years later, private producers became the leading force of the sector.

According to the Report, Chinese government will support the development of private producers in 2018, insist in equality in rights, opportunities and rules, solve the key issues reported by the private enterprises, and break all kinds of hidden barriers.

Relationship between government and enterprises becomes key field to reform

The Report specially emphasized to build "cordial and clean relationship between government and business".

The relationship between government and business is key for market economy. The tire sector also has issues such as bad business environment and power-for-money deals.

Such issues are expected to lessen as the emerge of "cordial and clean relationship between government and business".

In addition, the business environment of the tire sector is also expected to change in 2018, it will take shorter time for approval of engineering construction programs and registration of trademarks.

Easing overcapacity the key task

One of the tasks of the Chinese government in 2018 is further promotion of supply-side structural reform.

Continue to ease ineffective supply is crucial for the task.

Li said "with a commitment to using approaches consistent with market principles and the rule of law, we will strictly enforce environmental protection, quality, and safety laws, regulations, and standards, and ease overcapacity and close down outdated production facilities."

According to the principles, a batch of cottage-type tire factories will be closed down.

In the meantime, "zombie companies" will also be dealt with by the government.

The Report says to strengthen work on "zombie enterprise" bankruptcy liquidations and reorganization, and ensure that affected employees are given assistance and debt are dealt with.

Many of the "zombie enterprises” are in the tire and rubber sector.