U.S. Growers Need China
Any way you slice it
February 25, 2009
China may be considered a “developing” country, but that moniker can be misleading. “Developing” doesn’t mean small, and it doesn’t mean without tremendous rapid growth. It also doesn’t mean the country has no impact on the rest of the world – especially for the United States cotton grower.
Quite the contrary, China is an economic driver, if not the economic driver, that affects cotton’s global landscape, from production and consumption to its exports of finished cotton goods around the world. For a country whose actions and policies are so pervasive, China has historically kept to itself, except in the export of finished goods. But that is the old China; the new China looks to its markets and adjusts to meet the needs of a merging global population.
Consider China’s reaction to the growing safety concerns of its export products, especially in the consumer sector. Earlier this summer, an array of Chinese products from toothpaste and makeup to fish and other food goods were discovered to contain chemicals at higher than recommended levels. China responded by implementing strategies to improve safety and quality standards in its exports. The global powerhouse is making strides to create a more transparent market situation and foster open dialogues with trading partners around the world.
The cotton industry is no different; if anything, the global cotton trade requires even more cooperation. And that mindset of cooperation extends to the U.S. grower – without China’s appetite for cotton, U.S. growers will have a difficult time marketing much of the U.S. crop in the future. According to USDA statistics, China imported approximately 11.25 million bales in 2006/07 to help meet its enormous demand. Those imports included growths from around the globe, but much of it came from fields from California to North Carolina.
For the U.S. grower to remain successful and proliferate in the future, communication between the U.S. and China must be a top priority. While it may be difficult for an industry like U.S. cotton to admit the necessity of other markets, with the elimination of Step 2, it is a reality we must face. But cooperative efforts between China, the U.S. and the world could lead to success down the road.
During the 2007 China Cotton International Cotton Conference held last June in Urumqi, China, Zhou Shengtao, president of the China Cotton Association, addressed this issue in the keynote address, calling international cooperation a “win-win” situation for China and the world.
China’s Growth Impacts World
Since China gained membership in the World Trade Organization (WTO) in 2001, the country has experienced rapid growth and change in its cotton industry. The opening of China’s markets will probably be viewed as one of the most influential events in cotton’s history. When China joined WTO, the country committed itself to global cooperation, and for growth and success to abound, that cooperation must continue.
“The five years after China joined the WTO is obviously a history of ‘opening the market’ and ‘entering the market.’ In the continual market opening and economic globalization, the Chinese cotton industry has not only influenced the world, but also has been influenced by the world,” Shengtao said. “Globalization has brought about a profound change to China and all the countries in the world and impelled the industry to think about some issues: integration, development, mutual benefit and mutual win.”
Shengtao is right. As China reaches out to trading partners across the world, it will be a win-win situation for all involved, especially the U.S. But this cooperation is not only a way to grow the industry to new heights; it is the only way the cotton industry can survive. China cannot produce enough cotton to meet its milling demand; similarly, many producing countries such as the United States need this relationship to market their cotton crop.
“The growth of cotton products and the relevant trades have promoted export growth as well as driven the growth of the domestic demands and national economy. Since the beginning of this century, China’s domestic marketing of textiles and clothing has kept growth faster than the export growth, with the domestic marketing ration increasing from 67% in 2000 to 73% in 2006,” Shengtao said.
“Cotton production has observed a new development, but still lags behind the rapid development of the textile industry. The production of domestic cotton fails to meet demand and thus import of cotton has increased to a great extent. From 2001 to 2006, China imported a total of 9.21 million tons. With Chinese and foreign cotton resources utilized, and through the skillful work of the Chinese people, consumers all over the world can enjoy the use of Chinese textiles and clothing with excellent quality and favorable prices.”
Cooperation Abroad, Growth Planned At Home
As China prepares itself for more international cooperation in its cotton industry, government and cotton leaders are making changes on the domestic front to increase production, find economies of scale and maintain well-planned growth in its textile sector. It is often difficult to balance the needs of all industry segments, but the China Cotton Association strives to meet that goal. In 2006, Shengtao said several projects and initiatives have been implemented to help all segments of China’s cotton supply chain.
“Since the beginning of this year, the Chinese government has successively released a series of policies, including the adjustment of sliding-scale duties, public acquisition of reserve cotton, adjustment of export rebates for textile products and cotton subsidies for improved species, to protect the farmer’s interests and enhance China’s sustainable development capacity for cotton product,” Shengtao said.
“We have a national strategy to strengthen the construction of infrastructures like farmland water conservancy, increase scientific and technological projection, improve the species according to local conditions, promote standardized cultivation, build quality cotton bases, create the cotton industry belt and promote the industrialization of cotton. It is to develop the chain distribution business of cotton and push forward the modernization of the cotton business. It is also necessary to promote the textile industry to adjust the industrial structure, raise the innovation capacity and promote industrial upgrading by improving the macro control modes.”
China, as well as the U.S. and global cotton industries, must plan for what lies ahead. Success can be found, but only through open dialogue and decisions based on a global outlook. Everyone must share a spirit of cooperation, beginning with cotton’s most influential player.
“We must remember that China is an important member in the world’s big cotton family,” Shengtao said. “China can’t develop without the world, but the world’s prosperity also needs China.”
A paradigm shift is re-shaping the U.S. cotton industry. Cotton producers must understand that China’s growth and stability will create success in the U.S., and the sooner that notion is embraced, the stronger our cotton industry will be.
Zhou Shengtao, president of the China Cotton Association, delivers the keynote address during the 2007 China International Cotton Conference.
More than 800 people from around the world attended the 2007 China International Cotton Conference during June in Urumqi.
China's Cotton Consumtion
(in 1,000 480-pound bales)
Source: USDA Foreign Agriculture Service