China abandons price controls on cotton

03 August 1998

China abandons price controls on cotton

CHINA plans to abandon purchasing price controls on cotton next year, opening up to market forces one of the countrys key commodities still under Government protection.

The liberalisation could reduce Chinese cotton prices, encouraging the local textile industry to buy more domestic cotton and cut into the countrys 4 million tonne stockpile.

But Chinese cotton farmers are concerned that they will suffer heavy losses as the price heads towards market levels.

Chinas price controls system has tended to keep the domestic cotton price higher than the price on the international market. This has led to large imports of cheaper cotton. These imports, taken together with huge harvests over the past three years, have led to a cotton mountain in the country.

No details have been given of how the new pricing system for cotton will operate.

  • Financial Times 03/08/98 page 3

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