Page 124 - 2023 White Paper on the Business Environment in China
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3 White Paper on the Business Environment in China
varieties and adjust their research to avoid be subjected to a maximum price, which will be
unnecessary investment. As well as technologies, settled by the Chinese spot cotton price in prior
the revised Seed Law, which took effect on March working day. If the Chinese spot cotton price is
1, has also strengthened protection of new plant higher than 18,600 RMB/mt in the prior working
varieties and seed-related intellectual property day, the reserves will be suspended. The reserving
rights. The revised law establishes a system of price is easy to go downward gradually. The state
essentially derived varieties that are distinct cotton reserves started on July 13, 2022, and the
from, but retain the basic characteristics of, the daily ceiling price of reserves is not confirmed
original varieties (Yimeng, “Seed ID Technology currently. Looking from the Chinese spot cotton
Helps Better Protect Owners’ IPR”). price index in early July, the ceiling price has no big
difference from market price. Besides, the ceiling
Cotton Industry price is the delivered price, and the warehouses
of China Reserve Cotton Management Co., Ltd.
Despite recent changes in international are basically in inland warehouse, so the reserving
trade, which brought new challenges to the price has no obvious advantages. Therefore, the
development of China's cotton industry, the reserving price in 2022 is much closer to the spot
country will continue to insist on opening up and market, giving no big support to cotton prices,
expand cooperation with its foreign counterparts, only adding a method of spot cotton circulation.
according to the China Cotton Association. The The reserves will depend on whether ginners can
group strongly condemned and firmly opposed the accept the price level. In general, the reserving
signing by the United States into law the so-called price is much closer to the market price this time,
Uyghur Forced Labor Prevention Act in December and the reserves policy may not reduce the losses
2021. Meanwhile, the COVID-19 pandemic and of Xinjiang ginners and solve the large quantity of
uncertain global macroeconomic situation Xinjiang cotton inventory but may add a new way
created some challenges to the domestic cotton for Xinjiang cotton to be digested under the impact
sector. In recent years, with rising labor costs, the of Xinjiang cotton ban. Of course, the calculation
mechanization of cotton production in Xinjiang method is easy to make the price go downward
has made rapid progress. The machine-picking gradually, and the support to cotton market is
rate of cotton in Xinjiang reached 87.9% in 2021, lower than market anticipation (CCFGroup).
said the China Cotton Association. The output of
cotton in Xinjiang accounts for more than 90% of At the end of this decade, Vietnam, Bangladesh,
the total nationwide. The total yield, unit yield and Indonesia, Turkey and Pakistan would account
planting areas of cotton in Xinjiang have ranked for a combined 47% of world cotton imports,
the top in China for more than 20 consecutive according to USDA’s long-term baseline. China's
years. In 2021, cotton prices surged due to strong share would be 24%, about the same as in recent
demand and the domestic and international years. Nevertheless, barring unforeseen policy
macroeconomic situation. The whole-year average changes, China should — for the foreseeable future
cotton price was 17,892 RMB (US$2,813) per ton, — remain a major market for U.S. cotton exports.
up 38.4% year-on-year, according to the China Imports crested at 24.5 million bales in 2011, fell to
Cotton Association (Xinjiang). 5 million bales in 2015 and are projected by USDA
for 10 million bales in the trade year that began
On July 8, 2022, China announced to organize on August 1. China shifted cotton production to
the first batch of cotton reserves in 2022. cotton Xinjiang as growers abandoned the labor-intensive
futures on the Intercontinental Exchange (ICE) crop in eastern and central China in favor of more
cotton futures market climbed up, but then fell profitable crops or higher-paying jobs in factories.
down, and Zhengzhou Commodity Exchange (ZCE) About 12 million Uyghurs, an ethnic minority, live in
overnight cotton futures also rose first and then Xinjiang. One of the world’s largest producers, the
slipped. The news about the state cotton reserves United States is the number-one cotton exporter,
gave no big support to cotton market, mainly due with shipments forecast for 14 million bales during
to the reserving price. The bidding process will the new trade year. The exports would amount to
90% of 2022’s crop (Abbott).
124
varieties and adjust their research to avoid be subjected to a maximum price, which will be
unnecessary investment. As well as technologies, settled by the Chinese spot cotton price in prior
the revised Seed Law, which took effect on March working day. If the Chinese spot cotton price is
1, has also strengthened protection of new plant higher than 18,600 RMB/mt in the prior working
varieties and seed-related intellectual property day, the reserves will be suspended. The reserving
rights. The revised law establishes a system of price is easy to go downward gradually. The state
essentially derived varieties that are distinct cotton reserves started on July 13, 2022, and the
from, but retain the basic characteristics of, the daily ceiling price of reserves is not confirmed
original varieties (Yimeng, “Seed ID Technology currently. Looking from the Chinese spot cotton
Helps Better Protect Owners’ IPR”). price index in early July, the ceiling price has no big
difference from market price. Besides, the ceiling
Cotton Industry price is the delivered price, and the warehouses
of China Reserve Cotton Management Co., Ltd.
Despite recent changes in international are basically in inland warehouse, so the reserving
trade, which brought new challenges to the price has no obvious advantages. Therefore, the
development of China's cotton industry, the reserving price in 2022 is much closer to the spot
country will continue to insist on opening up and market, giving no big support to cotton prices,
expand cooperation with its foreign counterparts, only adding a method of spot cotton circulation.
according to the China Cotton Association. The The reserves will depend on whether ginners can
group strongly condemned and firmly opposed the accept the price level. In general, the reserving
signing by the United States into law the so-called price is much closer to the market price this time,
Uyghur Forced Labor Prevention Act in December and the reserves policy may not reduce the losses
2021. Meanwhile, the COVID-19 pandemic and of Xinjiang ginners and solve the large quantity of
uncertain global macroeconomic situation Xinjiang cotton inventory but may add a new way
created some challenges to the domestic cotton for Xinjiang cotton to be digested under the impact
sector. In recent years, with rising labor costs, the of Xinjiang cotton ban. Of course, the calculation
mechanization of cotton production in Xinjiang method is easy to make the price go downward
has made rapid progress. The machine-picking gradually, and the support to cotton market is
rate of cotton in Xinjiang reached 87.9% in 2021, lower than market anticipation (CCFGroup).
said the China Cotton Association. The output of
cotton in Xinjiang accounts for more than 90% of At the end of this decade, Vietnam, Bangladesh,
the total nationwide. The total yield, unit yield and Indonesia, Turkey and Pakistan would account
planting areas of cotton in Xinjiang have ranked for a combined 47% of world cotton imports,
the top in China for more than 20 consecutive according to USDA’s long-term baseline. China's
years. In 2021, cotton prices surged due to strong share would be 24%, about the same as in recent
demand and the domestic and international years. Nevertheless, barring unforeseen policy
macroeconomic situation. The whole-year average changes, China should — for the foreseeable future
cotton price was 17,892 RMB (US$2,813) per ton, — remain a major market for U.S. cotton exports.
up 38.4% year-on-year, according to the China Imports crested at 24.5 million bales in 2011, fell to
Cotton Association (Xinjiang). 5 million bales in 2015 and are projected by USDA
for 10 million bales in the trade year that began
On July 8, 2022, China announced to organize on August 1. China shifted cotton production to
the first batch of cotton reserves in 2022. cotton Xinjiang as growers abandoned the labor-intensive
futures on the Intercontinental Exchange (ICE) crop in eastern and central China in favor of more
cotton futures market climbed up, but then fell profitable crops or higher-paying jobs in factories.
down, and Zhengzhou Commodity Exchange (ZCE) About 12 million Uyghurs, an ethnic minority, live in
overnight cotton futures also rose first and then Xinjiang. One of the world’s largest producers, the
slipped. The news about the state cotton reserves United States is the number-one cotton exporter,
gave no big support to cotton market, mainly due with shipments forecast for 14 million bales during
to the reserving price. The bidding process will the new trade year. The exports would amount to
90% of 2022’s crop (Abbott).
124
