Guangzhou, China – China’s tire & rubber products sector reported €141 billion (1.03 trillion yuan) revenue in 2016, at a growth rate of 2.6% compared with 2.1% in 2015, according to information released at the 2017 China Rubber Conference held in Guangzhou this week.

The sector’s profit rose by 6% to €8.8 billion, compared with a 3% drop in 2015, while investment in the sector increased 8% to €25 billion – though a senior industry official added a note of concern to the positive figures.

“The year 2016 was a good start for the rubber sector’s 13th Five Year Plan,” said chairman of China Rubber Industry Association Deng Yali in her speech at the event.

An exception is the tire segment’s investment, which fell by 2% to €8 billion following two years of decrease.

“Last year was a ‘policy year,’” said Deng. Driven by China’s automobile sales boosted by various government policies, CRIA member tire makers reported a 2% rise in revenue, although profit was down 1%.

Deng warned that when the market goes upwards, there might be a disruptive comeback of “zombie companies,” the low-end companies that suspended production or closed during the previous downturn. Deng pointed out several new tire projects in Shandong have already started up this month.