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China's domestic policy pushes cotton yarn imports
Jan '13
The implementation of temporary cotton purchase for state reserves by the Chinese Government has led to a surge in the country’s cotton yarn imports.
Under the policy, the Government purchased large quantities of cotton, pushing up the prices of domestic cotton. This prompted the textile industry to increase cotton yarn imports by as much as 30 percent in 2012.
When China began implementing its policy of cotton purchase for state reserves in 2011, the aim was to support its farmers. In the process, prices of cotton in China’s domestic market became 40 percent higher than international prices.
Thus, while supporting cotton growers, the Government’s policy has damaged the interests of Chinese textile enterprises. The policy has resulted in reduced cotton supply in Chinese domestic market, forcing the textile industry to depend on imports.
Unlike cotton, cotton yarn imports do not have any quota restrictions, and hence, traders prefer to import cotton yarn, instead of cotton, from other countries, especially India and Pakistan.
Currently, the import price of cotton yarn is about 2,000 yuan/ton lower than the domestic price.

Fibre2fashion News Desk - China

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