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China’s tobacco market continues to thrive. Photo credit: Bruce Mars, Pexels.
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Vaping has become a lifestyle choice for many Chinese consumers. Photo credit: Bimbim Sindu, Pexels.
While much of the world is making strides to curb tobacco consumption through regulations and public health campaigns, China’s tobacco industry is thriving, showing resilience in the face of global trends. The country’s growing market is largely driven by the state-owned China National Tobacco Corporation (CNTC), the world’s largest tobacco company. The booming industry, coupled with innovative trends in e-cigarettes and tobacco products, is a significant force in the Chinese economy.
A growing market
China’s tobacco market is expanding rapidly, despite the ongoing global push to reduce tobacco consumption. The country is home to more than 300 million smokers, making up nearly 30% of the global smoking population. In a world where smoking rates are declining, particularly in Western countries, China has seen a rise in both the consumption and production of tobacco products. In fact, CNTC continues to dominate the global market, accounting for over 40% of the world’s cigarette production.
In 2023, China produced a staggering 2.4 trillion cigarettes, continuing a five-year upward trend and showing a 35% increase from 2003, as reported by the National Bureau of Statistics. According to Euromonitor, China’s share of global tobacco sales grew to approximately 47% last year, up from just under 38% in 2009, reflecting consistent patterns observed in other tobacco-related research. The World Health Organization also projects a slower-than-global-average decline in tobacco use among those over 15, with the rate expected to drop by about four percentage points from 2000 to 2025, excluding e-cigarettes.
Part of this growth can be attributed to the increasing affordability and accessibility of tobacco products. While other nations struggle with higher taxes, health warnings, and smoking bans, China’s market remains more relaxed, with fewer restrictions and regulations on the sale and use of tobacco. As a result, tobacco has remained a staple in Chinese society, often associated with status and social interaction.
Tobacco’s economic impact
The economic importance of the tobacco industry in China cannot be overstated. It is a significant contributor to the country’s tax revenues, employment, and overall GDP. CNTC alone generates billions in taxes annually, funding various public services. For example, in 2023, CNTC contributed RMB1.5 trillion (US$206 billion) in tax revenue, accounting for roughly 7% of the central government’s total income.
Additionally, the tobacco sector provides jobs to millions of people, from farmers who grow tobacco to workers in manufacturing plants and retail. CNTC, alongside its regulatory body, the State Tobacco Monopoly Administration (STMA), employs more than half a million people, based on 2016 data. This makes the tobacco industry an integral part of China’s economic landscape, with few rival industries in terms of revenue and employment.
Rising e-cigarette and vaping trends
Another factor contributing to the boom in China’s tobacco industry is the rise of e-cigarettes and vaping products. While vaping is often considered a healthier alternative to traditional smoking, it is gaining popularity in China at a rapid pace. Domestic e-cigarette manufacturers have found great success in the Chinese market, offering innovative products that appeal to younger consumers.
Vaping has become a lifestyle choice for many, particularly among young people who view it as less harmful than traditional cigarettes. China’s e-cigarette market continues to grow. However, this trend is not without its challenges. The government has recently moved to tighten regulations on e-cigarette production, distribution, and sales to combat the rising concerns about youth access to these products.
Government involvement and challenges
The Chinese government plays a crucial role in the tobacco industry. As the sole owner of CNTC, the state has both a financial and regulatory interest in maintaining the tobacco market’s success. While the government has begun to introduce measures to curb smoking-related harm, including smoking bans in some public places and campaigns to reduce smoking rates, the market is still largely unregulated compared to Western countries.
The government has also been active in regulating the e-cigarette market, recently issuing guidelines by the China National Narcotics Control Committee, the Ministry of Public Security, and STMA to crack down on the sale of drug-laced e-cigarettes and the use of harmful substances. These regulations are part of an ongoing effort to address the health risks associated with vaping and e-cigarette use among young people, who are increasingly turning to these products.
The initiative aims to address the rise in the use of e-cigarettes containing drugs and banned substances, such as synthetic cannabinoids and etonitazene, which have been linked to a concerning surge in youth abuse. The guidelines call for better collaboration between various government agencies to tackle the issue effectively and systematically.
In addition, the guidelines emphasize the importance of clearly defined responsibilities across all involved agencies—narcotics control, public security, and tobacco regulation bodies—at all levels. They also highlight the need for stronger communication and coordination between departments to ensure a unified and efficient response.
Key actions outlined in the guidelines include targeting the illegal production and sale of drug-laced e-cigarettes, the addition of illicit substances to vaping liquids, the unauthorized manufacturing of new drugs, and the promotion of such practices through online platforms. The goal is to reduce the significant public health risks posed by these dangerous products, particularly to young people.
Global influence
China’s booming tobacco market is having a ripple effect on global trends. As the world’s largest producer and consumer of tobacco, China’s policies and market dynamics influence global tobacco supply chains. The country’s tobacco exports have increased in recent years, making it a significant player in global tobacco trade.
In 2019, CNTC went public with shares of its international affiliate in Hong Kong, using the proceeds to support its global growth strategy. Since the listing, the shares have surged over 230%, with a significant 140% increase just last year.
China Tobacco International (HK) Company Limited is preparing to broaden its tobacco leaf export business by establishing new framework agreements for additional regions. The company plans to adjust terms and annual transaction limits to strengthen its market presence. These initiatives are part of a larger strategy to boost sales in untapped markets, capitalizing on its ties with CNTC subsidiaries.
Additionally, the success of Chinese e-cigarette manufacturers has created a new global industry leader. Chinese companies are now exporting their vaping products to international markets, including the US and Europe.
The future of China’s tobacco industry
As China’s tobacco industry continues to thrive, it faces a range of challenges, including international criticism, rising public health concerns, and increasing domestic regulation. However, the government’s tight control over the industry, combined with its continued support for tobacco production, ensures that the sector will remain a powerful force in China’s economy for years to come.
In the future, China’s tobacco industry may face more international pressure, especially as global public health organizations push for greater regulation of tobacco products. However, given the economic importance of the industry and its central role in Chinese society, the government is likely to continue supporting the sector while implementing moderate reforms aimed at curbing smoking-related harm.
China’s tobacco industry is booming, defying global trends and demonstrating resilience in the face of challenges. The industry’s continued success, coupled with the rise of e-cigarettes, positions China as a key player in the global tobacco market.
The Chinese government tightened regulations on e-cigarette production, distribution, and sales.