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After reaching ‘peak cotton,’ a declining role for China

Rising costs and increasing competition will, in coming years, reduce the dominance that China has enjoyed in the cotton industry since joining the WTO in 2001, said an Agriculture Department report. China is the world’s largest cotton grower, importer and consumer at present, but other Asian countries are growing in importance as importers.

At the end of this decade, Vietnam, Bangladesh, Indonesia, Turkey and Pakistan would account for a combined 47% of world cotton imports, according to USDA’s long-term baseline. China’s share would be 24%, about the same as in recent years.

“Nevertheless, barring unforeseen policy changes, China should — for the foreseeable future — remain a major market for U.S. cotton exports,” said the Economic Research Service report. “China’s role as a cotton importer appears to have peaked, while other countries are increasing their share of imports.”

Imports crested at 24.5 million bales in 2011, fell to 5 million bales in 2015 and are projected by USDA for 10 million bales in the trade year that began on August 1.

“China’s cotton production, consumption and imports peaked between 2005 and 2013,” wrote ERS economists Fred Gale and Eric Davis. Beijing uses a tariff-rate quota (TRQ) to restrict imports, as a step to avoid reliance on foreign-grown cotton, and it depends heavily on production in the Xinjiang region, more than 2,000 miles from textile manufacturers in coastal and central China. Some Chinese officials envision cotton production and consumption holding steady in the near term.

“The lack of growth in the textile industry may not only be due to limits on imports but also to the changing economics of China’s cotton-textile-clothing industry chain,” said Gale and Davis. “Use of cotton has been constrained by factors such as rising production costs in many parts of China and the growing use of synthetic fibers. The trend also reflects strategic plans espoused by Chinese planners, including ‘high-quality opening’ and ‘One Belt One Road’ strategies, which are responses to the changing economics of the industry.”

China shifted cotton production to Xinjiang as growers abandoned the labor-intensive crop in eastern and central China in favor of more profitable crops or higher-paying jobs in factories. About 12 million Uyghurs, an ethnic minority, live in Xinjiang. Human rights groups accuse China of abuses that include unfairly detaining more than a million Uyghurs. Complaints include conscripting Uyghurs to harvest cotton.

“China’s use of forced labor in Xinjiang attracted more attention to the textile industry,” said the ERS report. During 2020-21, the United States barred imports of cotton and cotton products from entities in Xinjiang using forced labor, and in January, the Uyghur Forced Labor Prevention Act instituted a broader ban on cotton grown in Xinjiang and on products made with the cotton.

One of the world’s largest producers, the United States is the number-one cotton exporter, with shipments forecast for 14 million bales during the new trade year. The exports would amount to 90% of this year’s crop.

The report, Chinese Cotton: Textiles, Imports and Xinjiang, is available here.

Produced with FERN, non-profit reporting on food, agriculture, and environmental health.
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