Development Trends of Tire Industry

　　1. The sustained macroeconomic growth has become the support for the growth of demand for automobiles and tires

　　In recent years, the domestic economy has maintained rapid growth, with an annual GDP growth rate of over 8% since 2000, and the level of national income continuously increasing. Experience has shown that the main factor affecting the demand for automobiles, especially passenger cars, is the growth rate of consumers, which directly depends on the growth rate of GDP. The sustained, rapid, and stable development of the Chinese economy has led to a continuous increase in residents' income, providing a favorable macro environment for the long-term growth of China's automotive and tire industries.

　　The automobile production reached 18 million units in 2010, a year-on-year increase of 32.44%, and the car ownership exceeded 80 million units. The usage of original and repaired tires will reach a new level. In the next five years, the development situation of China's automobile industry is still optimistic. From the perspective of the number of cars owned by thousands of people, China currently has 57 cars, while the United States has 817 cars, Japan has 591 cars, Germany has 537 cars, and the world average is also 200 cars, indicating that China's automobile market still has great potential for development. It is expected that by the end of the 12th Five Year Plan period, China's annual automobile production will reach 25 million cars.

　　2. Urbanization development has driven the growth of transportation volume

　　According to statistics from the Ministry of Housing and Urban Rural Development, China's urbanization rate reached 44.9% in 2007, and according to predictions from the Development Research Center of the State Council, it is expected to reach around 55% by 2015. Urbanization leads to an increase in human capital flow, passenger and freight volume, which in turn leads to an increase in transportation intensity. This will continue to drive the development of industries such as highways, automobiles, and real estate, providing a favorable environment for the long-term growth of the tire industry.

　　3. The development stage of heavy industry in our country has led to an increase in transportation intensity

　　At present, China's economic structure is still dominated by the secondary industry, which accounted for 48.61% of the national economy from 41.6% in 1990 to 48.61% in 2008. The development speed of heavy industry has always been 3-4 percentage points higher than that of light industry. China will still be in the stage of heavy chemical industrialization from now until 2020, and the economic growth driven by heavy chemical industry will inevitably lead to high transportation intensity.

　　4. The uneven distribution of resources in our country has resulted in high transportation intensity

　　The more uneven the distribution of resources, the higher the transportation intensity. China is a country with unbalanced distribution of resources. Taking bulk goods as an example, in the distribution structure of eastern, central and western regions, coal is 15.3%, 58.5% and 26.3% respectively, steel is 67%, 24% and 9% respectively, and cement is 56.5%, 27.9% and 15.6% respectively. Light industrial products are mainly concentrated in the southeastern coastal areas. The uneven distribution of resources has given rise to a large amount of cross regional logistics flow.

　　5. The large-scale construction of highways in our country has provided convenience for road transportation

　　China will basically build a national highway network by 2020. At that time, the total mileage of highways in China will reach 100000 km. The road network is composed of 7 capital radiation lines, 9 north-south longitudinal lines and 18 east-west transverse lines, referred to as "7918 network". By the end of 2009, the total mileage of highways in China reached 3.86 million km, including 65000 km of expressways, 59500 km of first-class highway, 300000 km of second-class highway, and 380000 km of third-class highway. At present, the "five vertical and seven horizontal" national trunk roads with a total length of 35000 km have been fully completed.

　　6. The transportation mode dominated by road transportation in China has become the support for the growth of demand for automobiles and tires

　　The growth of railway transportation capacity in China's land transportation mode is limited, and road transportation will be the main way to solve the significant increase in the overall social flow of goods. The automobile road freight volume in China accounts for over 70% of the total national freight volume, with an average annual growth rate of over 10% in recent years. From 2001 to 2010, the growth rate of national freight turnover continued to climb. In 2010, the total freight volume in China was 32.03 billion tons, of which the road freight volume was 24.25 billion tons, a year-on-year increase of 14%; The total turnover of goods is 1373.29 billion ton kilometers, of which the national highway freight turnover is 4300.54 billion ton kilometers, with a year-on-year increase of 15.64%. The growth in freight turnover directly drives the demand for commercial vehicles.

　　7. Western Development

　　The Western Development is another major development opportunity. The Western Development is a major strategic decision of the central government. In November 1999, the Central Economic Work Conference first proposed the Western Development. Ten years later, the State Council held another Western Development Work Conference and formulated the development strategy for the next ten years. 23 key projects have been identified, with an investment of 682.2 billion yuan. In addition, the Western Development covers a wide range of 12 provinces and cities, including Chongqing, Sichuan, Guangxi, Guizhou, Yunnan, Xizang, Xinjiang, Shaanxi, Gansu, Qinghai, Ningxia and Inner Mongolia, covering more than half of China.