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Cotton Policy in China
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Cotton Policy in China

Author

Listed:
  • MacDonald, Stephen
  • Gale, Fred
  • Hansen, James

Abstract

This report examines China’s 2011-13 attempt to maintain a high level of price support for its cotton producers, analyzing the policy’s motivation, its consequences to date, and the impacts of various adjustment alternatives China might pursue. With China’s wages rising rapidly in recent years, cotton production costs there have been rising faster than in the rest of the world. Rising costs both helped motivate China’s policymakers to strengthen their price support for cotton production in 2011 and ensured that the policy ultimately proved unsustainable. After several years of sharply lower cotton consumption and sharply rising state-owned stockpiles of cotton, China in 2014 began switching producer support to direct subsidies, and focusing support on producers in the largest producing region, Xinjiang. Additional reforms include plans to restore market forces to a leading role in determining China’s cotton prices. But China’s large role in world cotton markets and the unprecedented size of the government’s stocks mean that difficult choices lie ahead for China’s policymakers. Policy decisions in China will continue to have a significant impact on the rest of the world, and lower Chinese import quotas for cotton could reduce world cotton prices significantly.

Suggested Citation

  • MacDonald, Stephen & Gale, Fred & Hansen, James, 2015. "Cotton Policy in China," MPRA Paper 70863, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:70863
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    References listed on IDEAS

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    Cited by:

    1. Bai, Yizhou & Xue, Cheng, 2021. "An empirical study on the regulated Chinese agricultural commodity futures market based on skew Ornstein-Uhlenbeck model," Research in International Business and Finance, Elsevier, vol. 57(C).
    2. Wenshou Yan & Kaixing Huang, 2022. "Geographic politics, loss aversion and trade policy: The case of cotton in China," The World Economy, Wiley Blackwell, vol. 45(9), pages 2854-2881, September.
    3. Gale, Fred & Davis, Eric, 2022. "Chinese Cotton: Textiles, Imports, and Xinjiang," Amber Waves:The Economics of Food, Farming, Natural Resources, and Rural America, United States Department of Agriculture, Economic Research Service, vol. 2022(Economic ), August.
    4. Mert Demir & Terrence F. Martell & Jun Wang, 2019. "The trilogy of China cotton markets: The lead–lag relationship among spot, forward, and futures markets," Journal of Futures Markets, John Wiley & Sons, Ltd., vol. 39(4), pages 522-534, April.
    5. Wenshou Yan, 2016. "Political Economy of Trade and Storage Policies Coordination, and the Role of Domestic Public Storage in the World Market," School of Economics and Public Policy Working Papers 2016-16, University of Adelaide, School of Economics and Public Policy.
    6. Arnade, Carlos & Cooke, Bryce & Gale, Fred, 2017. "Agricultural price transmission: China relationships with world commodity markets," Journal of Commodity Markets, Elsevier, vol. 7(C), pages 28-40.
    7. MacDonald, Stephen & Meyer, Leslie, 2018. "Long Run Trends and Fluctuations In Cotton Prices," MPRA Paper 84484, University Library of Munich, Germany, revised 10 Feb 2018.
    8. Aihemaitijiang Rouzi & Ümüt Halik & Niels Thevs & Martin Welp & Tayierjiang Aishan, 2017. "Water Efficient Alternative Crops for Sustainable Agriculture along the Tarim Basin: A Comparison of the Economic Potentials of Apocynum pictum , Chinese Red Date and Cotton in Xinjiang, China," Sustainability, MDPI, vol. 10(1), pages 1-17, December.
    9. Ictsd, 2015. "National Agricultural Policies, Trade and the New Multilateral Agenda," National Policies, Trade and Sustainable Development 320166, International Centre for Trade and Sustainable Development (ICTSD).

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    More about this item

    Keywords

    Cotton; China; agricultural policy; price supports; trade; textiles; trade policy; WTO; industrial policy;
    All these keywords.

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • F1 - International Economics - - Trade
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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