Five years of hard work and progress – the development achievements of the cotton industry since the 18th National Congress
Since the 18th National Congress of the Communist Party of China, my country’s economy has maintained medium-to-high growth, with consumption becoming the main driving force. The Chinese government has adapted to and led the new normal of economic development. We will innovate macro-control ideas and methods and promote supply-side structural reform. The cotton industry has seized opportunities, based on innovation, and actively explored aspects such as changing methods, adjusting structures, and promoting reforms. The industry has shown a stable and positive situation: prices have stabilized, inventories have decreased, production has been optimized, quality has improved, and demand has rebounded.
2013 is one year after the temporary cotton purchase and storage policy. Three years of purchase and storage stabilized the market, ensuring that the income of cotton farmers did not decline in the sluggish environment. However, at the same time, inventory pressure increased sharply, and the market Problems such as weakened vitality have become increasingly prominent. In order to give full play to the role of the market, protect the interests of cotton farmers, and promote the coordinated progress of the industrial chain, a pilot cotton target price reform was launched in Xinjiang from 2014 to 2016. After three years of practice, the cotton production layout has been adjusted, cotton quality and competitiveness have improved, and the market With increased vitality, we began to deepen the cotton target price reform in Xinjiang in 2017. At the same time, the state has adjusted its reserve cotton rotation policy, shifted the main task of reserve cotton to “destocking”, and gradually reduced reserve cotton stocks to a reasonable level. After several years of practical exploration, cotton industry policies have gradually moved toward institutionalization and normalization, playing an important role in stabilizing cotton production and promoting the continued healthy development of the fabric industry.
1. Cotton prices return to the market
Since the Xinjiang cotton target price reform pilot, the state no longer directly intervenes in market prices, and prices are decoupled from government subsidies. Domestic cotton prices are completely formed by market supply and demand. The market awareness of cotton-related entities has increased, and the upstream and downstream relationships in the industry have increased. Gradually straightened out, the price difference between domestic and foreign cotton has narrowed, promoting the healthy development of the fabric industry. The cotton target price reform explores a new way to decouple cotton prices from market supply and demand and decouple prices from government subsidies.
2. Optimization and adjustment of industrial layout
Through the guidance and driving role of policies, my country’s cotton production has further concentrated in Xinjiang’s advantageous production areas. Xinjiang’s output has increased from 40% five years ago to 70-80%, and the comparative advantages of cotton production are sufficient. At the same time, the cotton planting structure in Xinjiang has been adjusted, and the sub-optimal cotton areas have withdrawn from cotton production, realizing the transformation of the planting structure into a well-adjusted, smooth and optimized one.
In order to further enhance the supply guarantee capability of important agricultural products such as grain and cotton, the State Council issued the “Guiding Opinions on the Establishment of Grain Production Functional Zones and Important Agricultural Products Production Protection Zones” in April 2017, among which With Xinjiang as the focus and the main producing areas of the Yellow River Basin and Yangtze River Basin as supplements, 35 million acres of cotton production protection areas have been designated.
3. The effect of destocking is obvious
After the end of the temporary purchase and storage, my country’s cotton reserve inventory exceeds 11 million tons, equivalent to about one and a half years of domestic consumption, and the inventory pressure is huge. In order to promote “destocking”, relevant departments have decided to gradually and orderly digest cotton reserves and adjust the reserve scale to a reasonable level. The reserve cotton regulation policy has changed from a temporary initiative to a mechanism and a regular one. It has clarified the principles of reserve cotton digestion that are conducive to promoting the healthy progress of the industry, guiding the smooth operation of the market, reducing finances, and improving the reserve control mechanism. At the same time, it has determined the regular rotation of cotton reserves. Specific methods such as dynamically determining the minimum price based on market trends have played a positive role in stabilizing market expectations and digesting the inventory scale. After two years of deployment, the size of the cotton reserve has dropped to about 5 million tons, and the reserve size has become reasonable.
4. Cotton quality has steadily improved
With the establishment of a price mechanism in the market based on market supply and demand, high quality and good prices have been further reflected, the quality awareness of market entities has been significantly enhanced, all links in the industrial chain have paid more attention to quality control, and the quality of cotton has steadily improved. More in line with the needs of fabric companies. According to statistics, in 2016, 93% of Xinjiang cotton was 28 mm and above, 18 percentage points higher than before the reform. The quality of some cotton produced by the Xinjiang Production and Construction Corps has reached advanced levels, and the competitiveness of cotton has significantly improved.
5. Demand for fabrics picks up
Affected by various factors such as the economic environment and the large price difference between domestic and foreign cotton, cotton consumption gradually decreased during the temporary purchase and storage period, recovered during the target price reform pilot period, and has now returned to 8 million tons or more. The cost of cotton used by fabric companies has been reduced, their competitiveness has improved, and the efficiency of the entire industry has improved. This is mainly reflected in: the output of yarn, cloth, etc. is recovering, and product prices have increased; fabrics…��Exports of workwear have stabilized and the decline in exports has slowed. Xinjiang’s fabric industry is developing rapidly. From 2014 to 2016, the fixed asset investment in Xinjiang’s fabric industry reached 90 billion yuan, exceeding the total investment from 1978 to 2013.
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