Technical Specified Rubber Trade between Thailand and China

Abstract

Thailand and China play important roles in the trade of natural rubber because both countries are respectively the biggest exporter and importer of natural rubber in the world. However, there are many problems such as supply shortage of natural rubber to meet the demand for natural rubber and unstable prices. Therefore, it is necessary to examine how the behaviors of both countries affect the supply, demand and price of natural rubber in international trade in particular technical specified rubber (TSR) where this type of rubber have the greatest amount traded between the two countries. This study has two main objectives that include the following: (1) to analyze the factors that influence the export supply, import demand and price for technical specified rubber in Thailand and China, and (2) to analyze the impact of internal factors and external factors alteration to the export supply, import demand and price for technical specified rubber in Thailand and China. This study used econometric analysis and implemented two stage least squares (2SLS) method and simultaneous equation model and used time series secondary data from 1990 to 2010. The results showed that: (1) Thailand’s supply for TSR exports to China was influenced by amount of TSR Thailand export to China in previous year and amount of TSR Thailand production, while Thailand’s supply for TSR exports to non-China was influenced by amount of TSR Thailand production and amount of TSR Thailand exports to China, (2) China’s demand for TSR imports of Thailand influenced by China’s participation in WTO, amount of automotive production in China and China’s real price import of TSR, while China’s demand for TSR imports of non-Thailand influenced by amount of China’s TSR imports from non-Thailand in previous year, amount of automotive production in China and import tariff in China, and (3) world TSR real prices was influenced by world TSR real price in previous year, amount of exports supply of the world in previous year and amount of imports demand of the world, while real price TSR exports of Thailand was influenced by world TSR real price, amount total of TSR Thailand exports and USA fuel real price, while real price TSR import of China was influenced by world TSR real price ratio and real price TSR import of China in previous year. Historical simulation and forecasting simulation results show that increased production quantities of TSR policy in Thailand and abolition of import tax of TSR policy in China performed within TSR rubber trade between Thailand and China because it enabled to increase foreign exchange for Thailand's technical specified rubber exports.