Wang Jianhong: Development status and prospects of China’s cotton industry
On June 17, at the 2021 China International Cotton Conference jointly sponsored by the China Cotton Association and the National Cotton Trading Market, the Deputy Director of the Agricultural Materials and Cotton and Linen Bureau of the All-China Federation of Supply and Marketing Cooperatives and the Deputy Director of the China Cotton Association Chairman and Secretary-General Wang Jianhong took the title “Current Status and Prospects of China’s Cotton Industry Development” to sort out and look forward to the operation of the cotton market from three aspects: historical review, current situation and future prospects.
Since China joined the WTO in 2001, the cotton industry has undergone great changes. In 2001, the national cotton planting area was 72.147 million acres, and the output was 5.3235 million tons. In 2007, the output reached a maximum of 7.5971 million tons. By 2020, Xinjiang’s planting area accounted for 78.9% of the country. From the perspective of unit yield, my country’s cotton yield per unit area was 73.8 kg/mu in 2001. In 2020, the unit yield has reached 124.3 kg/mu, an increase of 68.5% in 20 years. my country’s Xinjiang cotton production is at the forefront of the country. In 2001, Xinjiang’s yield per unit area was 86 kg/mu, and in 2020 it reached 137.5 kg/mu.
After joining the WTO, the textile and apparel industry has developed rapidly. As a product with a long cultural history, textiles became famous around the world with the opening of the Silk Road. At the same time, the textile industry was also the first industry in my country to develop and enter the international market. The fastest growing and most developed industry in the international market. At present, my country’s textile and clothing exports account for 34% of the world. In 2020, China’s total foreign trade of textiles and clothing was US$319.88 billion, an increase of 3.75 times compared with 2001, of which exports were US$296.23 billion, compared with US$296.23 billion. In 2002, it increased by 4.54 times. In 2020, my country’s yarn output was 26.183 million tons and cloth output was 46.03 billion meters, an increase of 244.2% and 58.7% respectively compared with 2001. In the past two decades, China has become the world’s largest textile and apparel industry center and supply chain hub, and has a huge consumer base. market.
In recent years, new technologies have driven the domestic consumer market to undergo disruptive changes. In particular, digital development has increased consumers’ purchasing power and changed traditional consumption patterns. With the help of various marketing channels, consumer shopping has become “all-weather shopping, omni-channel shopping, and personalized shopping.” In 2020, online sales of clothing exceeded offline sales for the first time. Retail sales of clothing consumer goods by enterprises above designated size reached more than 800 billion yuan, an increase of 10.6 times compared with 2001.
From the perspective of cotton consumption, it has basically remained stable. In the past fifteen years, except for 2019, cotton consumption has basically remained at 8-10 million tons, ranking first in the world. With the rapid development of the textile and apparel industry, the demand for cotton has gradually increased, and the gap between production and demand has existed for a long time. Importcotton has become an effective supplementary channel for my country. In 2012, the import volume hit a record high of 514 Thousands of tons.
After joining the WTO, cotton prices began to align with international standards. While the world is affecting China, China is also affecting the world. Domestic cotton prices have gradually returned to the market and are in line with international standards. In recent years, the financial attributes of cotton have been enhanced, and a price system that integrates internal and external links and combines futures and cash has basically been formed.
This year’s cotton situation shows a trend of stable policies, stable production, rebounding demand, increased imports, relatively stable cotton prices, and basically balanced supply and demand.
In terms of policy, domestic cotton policy has been further improved on the basis of maintaining stability. Policies have become more forward-looking, targeted, and collaborative, providing a good environment for industry development.
In terms of production, the National Development and Reform Commission issued the “Notice on the Action Plan for Deepening the Reform of the Price Mechanism During the “14th Five-Year Plan” Period. It is proposed in the document that we should improve the cotton target price policy, improve the risk sharing mechanism, reasonably adjust the cotton target price level, and continue to explore new sustainable cotton policies. From the perspective of cotton reserve policy, while maintaining the normalization and institutionalization of the policy, the mechanism setting is more in line with market rules. In 2020, 371,600 tons were imported and 503,000 tons were shipped out. In December, the rotation could not start due to the large price difference between domestic and foreign cotton.
In terms of quota management policies for imported cotton, the amount issued is generally loose. On the basis of the 894,000 tons of tariff quota, in order to ensure the cotton needs of textile enterprises, an additional 700,000 tons of cotton import sliding tax quotas will be issued in a timely manner, all of which are non-state trade quotas. The sliding tax rate was lowered at the end of December 2020, which reduced the cost of cotton for textile companies.
This year’s total domestic cotton output is stable, but the regional layout is too concentrated in Xinjiang, and the cotton planting area in the mainland continues to decline sharply. According to statistics from the China Cotton Association, the country’s total output was 5.924 million tons, a year-on-year increase of 0.3%; of which, Xinjiang’s cotton output was 5.244 million tons, a year-on-year increase of 4.1%, accounting for 88% of the total output; the mainland’s output was approximately 644,000 tons, a year-on-year decrease of 22% %.
The cotton balance sheet released by the China Cotton Association predicts China’s cotton output in 2020/21 to be 592.37 tons, with imports of 235 tons, consumption of 810 tons, and ending stocks of 8.0489 million tons. In terms of cotton demand, it has rebounded from the previous year because the domestic epidemic has been effectively alleviated. As the epidemic spreads further abroad, textile orders have returned. Orders from large and medium-sized textile companies are relatively sufficient, and the textile industry has shown a recovery growth trend since September 2020.
According to the China Cotton Association’s forecast, the consumption in 2020/21 will beThe volume was 8.1 million tons, a year-on-year increase of 5.9%. In the first eight months, the country’s cumulative yarn output was 19.345 million tons, a year-on-year increase of 10.9%. In terms of cloth output, it was 26.05 billion meters, a year-on-year decrease of 3.4%. From the perspective of textiles and clothing, according to customs data, textile and clothing exports from January to May were US$112.7 billion, a year-on-year increase of 17.2%; the cumulative exports in the first nine months were US$216.7 billion, a year-on-year increase of 13.7%. The 2020 data is lower due to the epidemic base Low, coupled with the effective control of the domestic epidemic and stable production, which can meet the demand of the international market, the growth of textile and clothing exports is relatively large.
China remains the world’s largest consumer of cotton. According to the latest forecast from the United States Department of Agriculture (USDA) in June, global cotton consumption in 2020/21 will be 26.679 million tons, a year-on-year increase of 4.37%. Among them, China, India, and Pakistan have the highest consumption proportions, accounting for 33%, 20%, and 9% respectively. Especially this year, our country has successfully responded to epidemic prevention and control, maintaining the stability of production, life, and society. The quality and efficiency of economic development have continued to improve, and the consumer market has great potential for recovery. . It is believed that as the epidemic situation improves and the trading environment improves, consumption potential will be further released.
At the same time, cotton imports have increased significantly due to the recovery of consumption. According to customs statistics, my country imported a total of 2.171 million tons of cotton in the first eight months of 2020, a year-on-year increase of 88%. Since the beginning of this year, textile production and consumer demand have continued to recover, especially with the effective implementation of the first phase agreement between China and the United States, and my country’s cotton imports have grown rapidly. Judging from the source countries of my country’s imported cotton in the first eight months of 2020/21, the United States ranks first, accounting for 45%, Brazil is second, accounting for 28%; the third is India, accounting for 15%; the fourth It is 3% of Australia.
From the perspective of commercial inventories and industrial inventories, commercial inventories decreased and industrial inventories increased, indicating that the overall situation is better. The commercial inventory at the end of April 2021 was 3.53 million tons, which was lower than 210,000 tons in the same period last year, a year-on-year decrease of 6.1%; at the same time, the textile industry inventory was 850,000 tons, a year-on-year increase of 18.3%.
From a price point of view, the trend is stable. As of June 16, the annual average price of the China Cotton Price Index (3128B) was 14,968 yuan/ton, a year-on-year increase of 19.2%; the annual average price of the main contract of Zheng Cotton Futures was 14,895 yuan/ton, A year-on-year increase of 19.6%. At the same time, since April, everyone knows that the prices of domestic iron ore and other commodities have increased significantly, which has attracted great attention from relevant national departments and has also introduced a series of regulatory measures. At present, domestic cotton supply and demand are basically balanced, and market prices are relatively stable. The international cotton price has a relatively large amplitude. As of June 16, the Cotlook A index was 95.60 cents/pound, down 2.90 cents/pound from the year’s high; the annual average price was 84.54 cents/pound, a year-on-year increase of 18.6%. The settlement price of the main ICE futures contract was 85.95 cents/pound, down 7.74 cents/pound from the year’s high; the average annual settlement price was 78.4 cents/pound, up 25.9% year-on-year.
The price difference between domestic and foreign cotton continues to fluctuate. Since September 2020, the maximum price difference between domestic and foreign cotton is 2,311 yuan/ton, the minimum price difference is 378 yuan/ton, and the average price difference is 1,306 yuan/ton. According to data from the National Bureau of Statistics, the first quarter of 2021 was 24.931 billion yuan, a year-on-year increase of 18.3%, and a quarter-on-quarter increase of 0.6% over the fourth quarter of 2020. From the first to fourth quarter of last year, my country’s GDP growth rates were -6.8%, 3.2%, 4.9% and 6.5% respectively, indicating that our country’s economy continues to recover steadily and the supply and demand relationship is gradually improving. The epidemic is still spreading in other countries around the world. The international environment is complex, with strong uncertainty and instability. The foundation for domestic economic recovery is not particularly solid, and structural contradictions still exist for a long time.
Judging from the latest forecast, the national cotton planting area is 43.497 million acres, a year-on-year decrease of 5.38%. The area in Xinjiang increased by 0.62%, the Yellow River Basin decreased by 33.2%, and the Yangtze River Basin declined by more than 20%.
In the future cotton industry, Wang Jianhong believes that in terms of cotton consumption, it should be stable at 8-9 million tons, and cotton production should be maintained at 5.5-6.5 million tons. The development of the cotton industry is oriented towards high quality. At the same time, it is necessary to establish the brand image of Chinese cotton and achieve the sustainable development of Chinese cotton.
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