No. C2006015 2006-09 * No. C2006015 2006 9 18 * 1
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China s cotton trade policy at the crossing road Summary The paper assesses the recent surge of China s cotton imports and evaluates the policies regulating cotton imports such as quota and sliding duties. In light of the evidences regarding China s domestic cotton production and labor productivity, cotton farmers income, growth of cotton textiles and its job creation effects, the paper argues that the growth of cotton imports is indeed a healthy development. The policies of quota and sliding duties are nevertheless inefficient and/or at odds with basic principles of market mechanism. The paper proposes to further liberalize China s cotton trade policies unilaterally and/or in the multilateral context of the Doha Round negotiations. Key words: China s cotton trade, cotton quota, sliding duties 3
1 2 2-1 2-2 3 3-1 3-2 4 5 6 7 12000-2005 11980-2005 2-A1981/1 2006/6 2-B1981/1 2006/6 31978-2006 41978-2004 51993-2004 6-A1980-2005 6-B1980-2005 71992-2004 82000-2005 92001-2005 10 11 1 11981-2005 22004 12000-2002 22003-2005 32000-2005 420002005 4
Contents of Chapters 1Recent surge of China s cotton imports and the policy debate 2Assessing cotton imports from China s domestic production sector 2-1Cotton output growth and evolving regional pattern 2-2Changes for cotton labor productivity and cotton farming incomes 3Assessing cotton imports from China s textile and clothing sectors 3-1Recent growth of China s textile output and exports 3-2Measurements of job creation by China s textile sector 4Economic analysis of China s cotton quota regulation policy 5Economic analysis of China s cotton sliding duties policy 6Necessity of cotton price integration and policy suggestions 7China s cotton trade policy at the crossing road: Concluding remarks Appendix 1Estimates of employments working in the cotton textiles sectors for the firms above the scale in China (2000-2005) Reference Figures and Tables Fig.1China s cotton trade (1980-2005) Fig. 2-AThe Chinese and foreign cotton prices (Jan. 1981 Jun. 2006 Fig. 2-BGap between the Chinese and foreign cotton prices (Jan. 1981 Jun. 2006) Fig. 3Cotton total output and output per area in China (1978-2006) Fig. 4Cotton labor productivity in China (1978-2004) Fig. 5Incomes from cotton farming and cotton imports in China (1993-2004) Fig. 6-AOutputs of yarn and chemical fiber in China (1980-2005) Fig. 6-BOutputs of cloth and apparels in China (1980-2005) Fig. 7Imports and exports of cotton textile products in China (1992-2004) Fig. 8Employments for the textile firms above the scale in China (2000-2005) Fig. 9Employments for the whole textile industry in China (2001-2005) Fig. 10Analytical framework for assessing the import quota Fig.11Schematic presentation of China s open cotton industry Fig. 1 in Appendix 1Statistical coverage of China s textile industry Table 1Regional pattern of China s cotton production (1981-2005) Table 2Employments in textile sector by China s economic Census 2004 5
1 1 78.1 89.4 2 1 2005 250 11980-2005 2 2006 6 4 2 2006 9 3 1 2006 8 8 2006 2006 8 2 152 2001 78.1 2002 2004 81.9 85.6 89.4 1% 3 2006 9 5.52 / 36% average ginning yield10 400 ginning cost 400 yuan per tonne 13512 / 77 / 5.7-5.8 / a lint price of Grade 3 14200 / 81 /seed cotton prices 5.8-6.0 / 15000 / 85.5 /Cotton Outlook, Vol. 84, No. 36, September 8, 2006, p. 7 2006 9 6 2006 12 6 2007 3 6
2-A 4 1000-2000 53.41 / 57.06 /Cotton Outlook, Vol. 84, No. 36, September 8, 2006, p. 4 4 7
2005 5 sliding duties 40% WTO MFA 23 45 6 7 2 2-1 3 443 / 1130 3.34% 1978 217 600 3.7% 1978 217 1984 626 1980 1989-1991 378 567 1999 383 2004 632 600 8
1997 1998 120138 1998 19991999-2005 20062006 2006 8 30 2006 1 1980 4% 1990 23.7% 30.4% 11981-2005 1981/82 1981 1983 1996/97 1998 2004 20052005 2006 9
2-2 4 70 80 1978 0.6 / 1987 1.6 / 1.67 11.5% 1988-1997 1997 1.7 / 1987 1998-2004 2004 3.1 / 82.4% 9%2003 2004 20052006 2004 5.17 6.5% 5 5 Gene modified organisms: GMOs 90 5% 2005 73%1999-2005 1.27 60-80% 25% 180-220 1000 10
5 1992-2004 1990 1990 1990 1999 2005-2006 6 1 2 10% 6 2006 6 11
3 3-1 2005 2005 2006 1 55 1949-2004 2005 2005 2006 1 55 1949-2004 198019851990 1994 2000/2001 6 20 1980 2000 253 657 20 404 4.89% 2005 1412 2000-2005 755 16.5% 1980 45 2000 694 20 650 2005 1629 5 935 12
1980 135 2000 277 20 142 2005 494 5 217 1980 9.5 2000 72 20 62.5 2005 148 5 76 7 HS 1992 81 1999 104 2.7% 1999 2004 104 253 15.95% HS 2005 1400 980 40% 400 12% 350 3-2 13
7 8 2000-2005 8 418 573 5 155 763 978 215 1 8 9 2001-2005 2001 1281 2005 2024 4 743 685 1162 477 7 1 8 500 1999419 14
2006 1900 1960 9 2005 2024 4%-7% 2004 2 2004 983 2004 919 7% 1382 1769 28% 2004 1357 22004 587.92 794.8 306.4 375.97 331.91 507.68 39.19 43.38 24.1 36.33 983.12 1382.19 2004 28% 10 119.3 31 75 2001-2005 4 300 185.8 43 9 1960 1350 2006 4000 1900 2006 1.5 1900 2006 10 2004 9000 7592 2006 15
114 2001-2005 458 90% 2001-2005 270 412 2 2001-2004 36513 35269 1244 25% 16%2001-2004 16219 16920 656 52% 34% 32001-2004 16 656 225 34.3.4% 342 52.1% 1244 203 16.3% 309 24.9% 4 800 1200
10 S D P W cif OQ D OQ s D 1 D 0 P w S 1 S 0 P w t Q S Q D Q S Q D A A+B+C+D A D B C deadweight lose 10 D 1 S P* P W t A S 0 B D C D 0 D S 1 O Q S Q S Q D Q D Q S Q D D D / P W Q S Q D P * D 11 11 17
89 5 2005 5 1998 Johnson, 1973 WTO WTO 90 18
1996 90 90 6 11 19
11 90 WTO 20
/ 7 21 21
12000-2005 1 500 12 34 1 1 2002/2003 298-299 22
2000-2005 2000-2002 2003 2000-2002 2003 2000-2002 2003 22003-2005 2001/2002 2002/2003 2000-2002 2003 2000-2002 2003 1 2000-2002 76-77% 77% 47-48% 48% 1 20002002 2000 2001 2002 276.61 275.90 275.59 163.75 161.20 160.16 48.31 49.98 49.77 27.46 28.66 30.00 27.35 24.83 24.24 2.96 2.71 2.81 0.77 0.77 0.76 52.06 57.11 61.20 24.83 27.22 28.83 0.48 0.48 0.47 2000/20012001/20022002/2003 2 2000-2002 2003 2003 2000-2002 2003 2003 23
2 20032005 2003 2004 2005 228.07 232.90 258.90 0.77 0.77 0.77 / 296.20 302.47 336.23 79.11 116.11 123.52 0.48 0.48 0.48 * 37.98 55.74 59.29 2003/20042004/2005 2005/2006 1 2000-2002 3 50 3 3 20002005 *0.5 *0.5 2000 218.83 109.42 15.93 7.96 2001 240.28 120.14 16.06 8.03 2002 257.49 128.74 16.06 8.03 2003 29.26 145.13 15.98 7.99 2004 316.82 158.41 16.12 8.06 2005 340.19 170.10 16.52 8.26 2000/20012005/2006 4 23 4 2000 418.82 2005 573.88 155.06 24
420002005 1 2 3 4 1+2+3+4 2000 276.61 24.83 109.42 7.96 418.82 2001 275.90 27.22 120.14 8.03 431.29 2002 275.59 28.84 128.74 8.03 441.20 2003 296.20 37.98 145.13 7.99 487.29 2004 302.47 55.74 158.41 8.06 524.67 2005 336.23 59.29 170.10 8.26 573.88 23 20062006 2006 8 8 2006 7 2006 8 1 32-33 1998 1998 2 2004 325-339 2000 1981-19992000 6 1981-1999 2004 205-223 CCER 2005 4 16-24 2006 2 11 20062006 2006 8 8 20062006 2006 8 8 Johnson, D. Gale (1973): World Agriculture in Disarray, The Macmillan Press Ltd. 25