By Qin Zhongchun, Research Department of Rural Economy, DRC

Research Report, No.191, 2019 (Total 5691)

2019-10-29

Abstract: Since the fourth quarter of 2018, China’s cotton market has surprisingly entered a “bear period” again. Cotton prices kept falling significantly. The recent round of periodical recovery of the cotton market was interrupted earlier. Cotton related companies and cotton planters in China’s mainland face serious losses. Its impact on the future national cotton production adjustment cannot be ignored. This new change in the cotton market is mainly due to the influence of the trade conflicts between China and the US, including the impact of the US’ constantly raising tariffs on China’s products, China’s countermeasures and the impact of this conflict on future prospects. Meanwhile, there are also some other factors, such as the adjustment of China’s cotton supporting policies, the large import of cotton and cotton yarn, and China’s new round of high-level opening-up. It is advisable for the government to be calm, hold the bottom-line, grasp the key issue and solve the problems. Focus needs to be given on improving and innovating policies, perfecting the system for dispersing agricultural risks, and enhancing agricultural risk management. In addition, we need to promote high-quality development of the cotton industry from its source, and accelerate the transition from production-oriented to competitiveness-oriented development.

Key words: China-US trade friction, cotton market, new situation, risk management