After reaching the “peak of cotton”, a declining role for China
Rising costs and intensifying competition will in coming years reduce the dominance China has enjoyed in the cotton industry since it joined the WTO in 2001, according to a report by the Department of Agriculture. China is currently the largest producer, importer and consumer of cotton in the world, but other Asian countries are gaining importance as importers.
By the end of this decade, Vietnam, Bangladesh, Indonesia, Turkey and Pakistan would together account for 47% of world cotton imports, according to the USDA’s long-term baseline scenario. 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,” the Economic Research Service report said. “China’s role as a cotton importer seems to have peaked, while other countries are increasing their share of imports.”
Imports peaked at 24.5 million bales in 2011, fell to 5 million bales in 2015 and are projected by the USDA for 10 million bales in the marketing year which began 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 quota (TRQ) to restrict imports, to avoid dependence on overseas-grown cotton, and it relies heavily on production in the Xinjiang region, more than 2,000 miles from textile makers from the coast and central China. Some Chinese officials expect cotton production and consumption to remain stable in the short term.
“The lack of growth in the textile industry may be due not only to import limitations, but also to the economic development of the cotton-textile-garment industry chain in China,” Gale and Davis said. “The use of cotton has been limited by factors such as rising production costs in many parts of China and the increasing use of synthetic fibers. The trend also reflects the strategic plans adopted by Chinese planners, including the “High-Quality Opening” and “One Belt One Road” strategies, which are responses to economic changes in the industry.
China shifted cotton production to Xinjiang as growers abandoned labor-intensive cultivation in eastern and central China in favor of more profitable crops or better-paying jobs in the factories. About 12 million Uyghurs, an ethnic minority, live in Xinjiang. Human rights groups accuse China of abuses, including the unjust detention of more than a million Uyghurs. Complaints include the conscription of Uyghurs to harvest cotton.
“China’s use of forced labor in Xinjiang has drawn more attention to the textile industry,” the ERS report said. In 2020-21, the United States banned imports of cotton and cotton products from Xinjiang entities using forced labor, and in January, the Uyghur Forced Labor Prevention Law instituted a broader ban. cotton grown in Xinjiang and products made with the cotton.
One of the world’s largest producers, the United States is the top exporter of cotton, with expected shipments of 14 million bales in the new marketing year. Exports would represent 90% of this year’s harvest.
The report, Chinese Cotton: Textiles, Imports and Xinjiang, is available here.