Sep 06, 2023
In previous years, the announcement of the sliding-scale quota policy was usually made between Apr and Sep, with most announcements occurring between Apr and June. This year, the announcement was relatively late, possibly indicating a deliberate coordination with the state cotton reserves sales policy to curb the rise in cotton prices and reduce the price difference between Chinese domestic and international cotton.
Looking at cotton imports in the first half of 2023, the volume was at its lowest compared to the same period in previous years. From Jan to Jun, cumulative imports amounted to 555,300 tons, a 51.09% decrease compared to the same period the previous year, and a 48.9% decrease compared to the five-year average for the same period (1.0866 million tons). According to seasonal patterns, cotton imports in the first half of the year are usually higher than in the second half. Although cotton imports are expected to increase significantly in the second half of this year, even if we consider the highest import volume in the past decade, which occurred in the second half of 2020 at 1,255,200 tons, the allocation of 890,000 tons for the 1% quota and 750,000 tons for the sliding-scale quota would be barely sufficient. Historically, normal import volumes in the second half of the year range from 650,000 to 900,000 tons. Therefore, from a quantitative perspective, the cotton import quota for the year 2023 is likely to be surplus. The arrangement of such a large import volume also indicates that policymakers intend to promote cotton imports in the second half of the year to balance the price difference between domestic and international cotton, protect the downstream textile and garment industry, and stabilize the domestic employment environment.