If The Sliding Tax Is Abolished, The Cotton Market Will Be Followed By Soybeans.

To save the textile industry, cancel the cotton.

Recently, media reports reported that the Ministry of finance is planning to amend the cotton slip tax and is preparing to investigate the textile industry in the second half of this year.

Insiders say the move is aimed at saving the edge of survival.

In recent years, China's textile industry has been suffering from many factors, such as sluggish international market demand, high production costs and exchange rate.

"The profitability of the spinning industry is the lowest, only 1%-2%."

In April 24th, Deng Huaxian, a consultant in strategic management, said.

In 2012, the textile industry recovered, but profits were still very low.

The major economic indicators and commodity figures released by the China Federation of Commerce show that clothing prices rose significantly in 2011, but the volume growth rate declined.

The data show that in 2011, China's clothing retail prices increased by 2.4% over the same period last year, while retail sales grew by 5.9 percentage points year-on-year.

In order to save textile enterprises, some enterprises and local governments have launched the idea of abolition of cotton sliding duty.

After the two sessions this year, the Shandong provincial government formally submitted an application to cancel the cotton slip tax to the relevant departments of the State Council.

The so-called sliding tax is an import tariff imposed on the same price of the same commodity in the import tariff according to the market price standard.

When the price of foreign cotton is lower, the higher tax rate will be imposed on it when imported, so as to achieve the purpose of consistency of domestic and foreign cotton prices in the Chinese market.

Deng Huaxian said that the price of cotton futures stocks in New York is about 12 thousand yuan / ton in recent years, while the price of domestic cotton is as high as 19 thousand yuan / ton, and the price difference is 4000 yuan -8000 yuan.

According to the sliding tax, if the annual import volume is 4 million tons, the entire textile industry will reduce the cost of 6 billion yuan -70 billion yuan.

"Although it is only a drop in the bucket for the entire textile and garment industry, it can indeed alleviate the crisis in the spinning industry to a certain extent."

"When a textile enterprise is in a disadvantageous position, the state should not be fussy about this small tax.

Cotton imports can be liberalized. "

Ma Wenfeng, an agricultural analyst at Eastern agge, said.

However, they have forgotten another function of sliding tax, which is to protect the interests of cotton farmers.

In recent years, domestic cotton prices are much higher than foreign countries. Sliding tax is conducive to improving the price competitiveness of domestic cotton.

Once cancelled, it may be domestic.

If we cancel the sliding tax and no other compensation mechanism comes out, China will lose its pricing power on cotton and its dependence on foreign trade will also be high.

This is not only bad news for cotton growers, but also bad for the healthy development of the entire textile industry. "

Deng Huaxian said.

The existing data show that China's cotton planting area is decreasing year by year, and the quantity of imported cotton has reached 4 million tons per year, occupying 40% of the domestic market share.

From the next few years, this data will be further improved.

"Ma Wenfeng said."

Over time, cotton will become the second "soybean" in China.

The textile industry will face greater economic risks.

Gu Qingliang, director of the textile economics and management research center of Donghua University, bluntly said.

In this regard, Deng Huaxian suggested that China's abolition of the sliding tax can not be carried out step by step, we should gradually adjust from slow down.

More importantly, China must establish an alternative compensation mechanism before cancelling it.

For example, a Cotton Subsidy Policy similar to that of the United States was introduced.

Gu Qingliang suggested that China should find a way to improve the scale and industrialization of cotton production so as to reduce the cost of cotton planting.