Cotton Quotas Were Reduced To 4000 Yuan / Ton For Rent Seeking Tools.

China

Du Yuzhou, honorary president of the Federation of industry, said in Shanghai yesterday that China's cotton system has come to a stage of change. Due to the influence of cotton purchasing and storage and import quotas, China's cotton prices have been significantly higher than the international market. In the first half of this year, China's textile industry earned about 10 billion US dollars in foreign exchange earnings.

Du Yuzhou made the above remarks when he attended the "2012 textile and clothing Summit Forum". He pointed out that in the 1~7 months of this year, the national textile and garment industry exported 137 billion 400 million US dollars, down 0.2% compared with the same period last year. This is the first time since the new century.

One business person told reporters that at present, foreign cotton 1 tons including tax price of 14 thousand yuan, domestic cotton price is 18 thousand yuan, Chinese textile enterprises and other countries' enterprises are at a disadvantage in the competition, and the operation is very difficult.

Previously, the semi annual report released by 02698.HK, the largest cotton textile enterprise in China, showed that the company's revenue in the first half of this year was about 7 billion 710 million yuan, a decrease of about 4% compared with the same period in 2011, and the net profit of its parent shareholders should be about 54 million yuan, a decrease of about 90.1% compared with the same period in 2011.

In the first half of 2012, the gross profit margin of the company was about 5.4%, a decrease of about 7.3 percentage points compared with the same period in 2011.

Wei Qiao group openly interpreted the sharp decline in its performance: "during the period, China's domestic cotton prices have remained low; meanwhile, the international cotton prices have fallen sharply, making international cotton prices much lower than domestic prices.

The price increases the pressure of textile market competition, and the difficulty of raising the price of Chinese cotton textile products has a greater negative impact on the overall profitability of the group.

In 2011, a number of departments such as the NDRC and other departments issued the "2011 cotton temporary purchase and storage plan", determined to open up cotton at 19800 yuan per ton. The market is affected by this. The price of cotton has been rising steadily in the vicinity of the storage price line. However, the price of cotton in the international market is weak, far lower than the domestic cotton price.

In addition, China has quotas for cotton imports.

Insiders said that China's cotton purchase and storage and import quota management were also inevitable.

If quota management is not carried out, the planting and harvesting of foreign cotton, especially the United States and Brazil, will be mechanized. The quality of cotton is high and the cost is relatively low. If the import is liberalized, China's cotton will be hard to resist.

Du Yuzhou believes that the above policy has been alienated in the implementation process.

Take the cotton import quota as an example, the qualified units import cotton, but the production enterprises that need cotton can not get it or get very little. The enterprise should get the quota of cotton import, and an additional quota of 3000~4000 yuan per ton of quota.

He further said that this is an unreasonable phenomenon of dividing the profits of enterprises, which infringes the interests of the real economy and causes many difficulties to the textile enterprises.

"There is no reason to deny that quotas are rent-seeking systems".

According to the insiders, cotton purchase and storage, quota management and other domestic cotton prices are higher than foreign countries. In fact, the most reasonable way is to directly subsidize the farmers to the state, instead of intervening the market price in the form of purchasing and storing the price and supporting the market, so that the textile enterprises are in a passive position, but the relevant departments have their own difficulties. The direct subsidy to the farmers in the country is relatively high, and the direct subsidy to the farmers 1 yuan will cost 1 yuan, because some places may deduct subsidies.

The business community is worried about this if domestic and foreign

For a long time, textile enterprises will be forced to build factories overseas. Take South Carolina as an example, the price of local cotton is only 2/3 of China. This person said that it is not impossible for Chinese textile enterprises to build factories in the United States one day.