HANGZHOU, China - Rapid
development of the textile industry has made China
the world's largest cotton consumer and importer -
cotton is the country's third-largest product
import after soybeans and edible oil.
Quantity import of foreign cotton has met
the demand and helped cut the production costs of
China's cotton textile industry on the one hand,
but on the other hand, it is having a negative
impact on China's cotton market.
Statistics show that China's cotton import
has kept rising since
2003, from nearly
170,000 tons in 2002 to 870,000 tons in 2003, to
1.823 million tons in 2004, 2.572 million tons in
2005 and further to 3.25 million tons in the first
10 months of this year.
There are now
dozens of cotton dealers in more than 50 countries
exporting cotton to China, compared with only a
few in the past. The number of large state-owned
Chinese cotton-importing enterprises has also
increased, to more than 1,000. Many cotton dealers
from the United States, big or small, have opened
representative offices, branch companies or
agencies in China. US cotton production and
processing enterprises have also begun to export
cotton to China.
Other countries, such as
India and Australia, are also exporting cotton to
China.
China's cotton output has increased
from 5.32 million tons in 2001 to 5.7 million tons
in 2005, growing at an average annual rate of 2%,
while its demand for cotton by the textile
industry has increased from 5.91 million tons to
9.3 million tons, growing at an average annual
rate of 14%, and the supply shortage has increased
from 400,000 tons to 3.7 million tons.
Price advantage is the trump card of
foreign cotton producers. The field cost of ginned
cotton is 8,900 yuan (US$1,135) per ton in China,
3,000 yuan lower than that produced in the United
States. However, the cost, insurance and freight
of US cotton import in Chinese ports is
1,000-1,500 yuan per ton lower than that of
home-grown cotton. The reason lies in huge
subsidies the US government grants to its cotton
exporters.
The price of cotton on the
international market was 1,870 yuan per ton lower
than on the domestic market in the first half of
this year, and the average price of cotton
imported was 960 yuan per ton lower than on the
domestic market. Chinese cotton textile
enterprises relied on cotton import for more than
40% of their cotton consumption in the first half
of this year, thus cutting spinning cost by nearly
7%.
Meanwhile, compared with Chinese
enterprises, foreign cotton dealers offer a
higher-quality service, even providing technical
advice. Imported cotton also has advantages in
terms of delivery date and higher quality.
The impact of cotton importation cannot be
ignored, as it has dealt a blow to domestic cotton
production. Authoritative statistics show that
China produced 6.4 million tons of cotton this
year, up 8.6% year on year. However, despite
increased output, the income of cotton growers has
not increased commensurately.
The purchase
price of cotton in Xinjiang this year is 4.3-5.1
yuan (55-65 cents) per kilogram, as against
4.8-5.3 yuan in 2005. In 2004-05, China's cotton
imports from the United States increased by
150,000 tons; however, the import value decreased
by $300 million.
Affected by cotton
imports, the income of Chinese cotton farmers
decreased by $208 million in 2005, and 720,000
jobs were lost. In 2002-05, China imported a total
of 5.23 million tons of cotton, averaging more
than 1.3 million tons a year.
China may
adopt trade relief measures. Quantity import of
cotton has in fact harmed the interests of Chinese
cotton growers and dealers and Beijing can,
according to World Trade Organization regulations
and domestic laws, launch anti-dumping and
anti-subsidy investigations.
China exerts
quota management on cotton importation at present.
(Asia Pulse/XIC)
