Global Economy: China Has Reduced Contracted Imports Of American Cotton In The Past Three Months

China's annual cotton production rate is about 6 million tons, and the consumption is 7 million to 8 million tons. Therefore, there is a large gap in cotton every year. Therefore, China needs to import 1 million to 2 million tons of cotton every year.

As one of the major cotton producing countries in the world, the United States has few domestic spinning industries, so a large amount of cotton needs to be exported every year. China needs to import cotton, while the United States needs to export cotton, so the trade in cotton between China and the United States can be said to be just complementary. In addition, because the United States has banned the import of Chinese cotton products from Xinjiang in the past two years, Chinese textile enterprises have imported a large number of American cotton textiles and clothing and exported them to the United States market again. After several years of development, China has become the largest export market for American cotton, The United States has become the largest import market for China's cotton (the United States will account for 45% of China's cotton imports in 2023).

However, in the last two or three months, China has significantly reduced the contracted volume and import volume of American cotton (the proportion of China in the contracted export market of American cotton in 2024 has dropped from 40% in 2023 to 9% at present), resulting in the poor recent contracting situation of American cotton. Therefore, if Sino US trade relations become tense again, American cotton exports may face greater problems, because it is difficult for the United States to find a large alternative market like China.

Of course, the Chinese market also needs to import cotton, but there is no American market and there are other markets in Brazil that can replace the American market. Therefore, if Sino US trade relations become tense again, it will be a negative impact on American cotton.

For the Chinese market, although we can not import American cotton, our textiles and clothing are exported to the American market in large quantities. Although due to the trade war in the past few years, China and the United States are trying to find new markets to replace each other and reduce their dependence on each other, the market share of China's textile and clothing exports to the United States has declined in recent years (from 20% to more than 15%).

In addition, China is also reducing its dependence on several major markets in Europe and Japan. The share of its exports to Europe, the United States and Japan has dropped from 51% in 2019 to 35% at present. After experiencing the Sino US trade war, Chinese businesses are actively exploring new markets, especially increasing exports to the Belt and Road market, the Middle East market, Southeast Asia and other markets. However, considering that the consumption capacity of other markets is relatively limited, the United States is still the largest market for China's textile and clothing exports. Once the Sino US trade relations are strained, the impact on China's textile and clothing exports is also relatively large.

However, because the United States banned the import of cotton products originating in Xinjiang in the past few years, the volume of cotton products imported from the Chinese market by the United States in the past few years also declined significantly. According to otexa data, the cumulative volume of cotton products imported by the United States in 2023 will be 15.867 billion square meters, a decrease of 3.383 billion square meters, or 18%, compared with 2018; Among them, the volume of cotton products imported from China in 2023 will be about 3.3 billion square meters, a decrease of 2.9 billion square meters or 47% compared with 2018. In 2023, the volume of cotton products imported from China by the United States will only account for 21%, a decrease of 11% compared with 2018. Therefore, it can be said that China's cotton textile middle and downstream industries have become less dependent on the United States in recent years, but the United States is still the most important export market.

Therefore, from the perspective of Sino US textile and clothing trade, 33% of the textile and clothing imports from the United States come from China, while China's textile and clothing exports to the United States account for about 15% of the total export market. In fact, from the perspective of proportion, the United States depends more on Chinese textile and clothing than China depends on the United States market. In other words, if the United States imposes 60% tariffs on Chinese textiles and clothing, the impact on ordinary Americans will be greater, and American clothing may be more expensive. Of course, it will also have a great impact on China's textile and clothing export market. Chinese manufacturers need to find more markets to replace the United States, which is a relatively difficult thing in a short time.

Judging from the current US election, it seems that Trump is more likely to be elected in the future, and if he is elected, it will put more pressure on Sino US trade. It can be seen from the first round of trade war from 2018 to 2019 that the impact rate on cotton is probably empty. First of all, China is the largest export market for American cotton. If China does not import American cotton, it will have a greater impact on American cotton. Secondly, for Zheng Mian, the United States is China's largest textile and clothing export market. Once the United States imposes high tariffs on Chinese clothing, the impact on domestic textile and clothing will be relatively large, affecting the downstream consumption of cotton. Therefore, it is also a negative for Zheng Mian. Finally, for ordinary American residents, it is likely that the cost of purchasing clothes has increased, and the domestic inflation problem may become worse again. Although China and the United States have tried to reduce their dependence on each other over the years, it is difficult to decouple on a large scale in a short time because of the deep trade relationship between them and their dependence on each other. Therefore, the imposition of tariffs on this basis will have a great negative impact on both the American market and the Chinese market.