Where Will The Cotton Reserve Policy Go?

2015 is not easy for all links in the cotton spinning industry chain.

Cotton growers cried for cotton cultivation and worked hard all the year round, and cotton enterprises cried for quality and quantity.

The yarn is fierce and the cotton yarn is sold on credit.

Enterprises also shouted that cloth and clothing were not ready to sell, and money became stock.

Every link is miserable. In the final analysis, it is closely related to the macro economic environment.

At present, China's economy is still in a downward channel, the fourth quarter of the data are not optimistic, it is expected that the economic downturn will continue until the first quarter of 2016.

The deterioration of the macro economic environment in China will inevitably have a certain impact on all walks of life, especially in the cotton spinning industry.

Little things depend on themselves and events to see the country.

In the past year, we have seen that in order to cope with the economic downturn, the central bank has lowered interest rates 6 times. The central government has also adopted many stimulant policies, but little effect has been achieved. It also shows that the current economic problems in China can no longer be solved solely by stimulating policies. The supply side reform is needed, starting from supply and production end, and by improving the competitiveness of the productive forces and promoting economic development.

Specific to our country

Industry, when it comes to supply, you will think of cotton reserves.

Recently, we received a lot of requests from our customers, hoping to know the cotton year, quantity, quality and price of the previous cotton reserves, so as to calculate the quality structure of the present cotton reserves.

Although there are some problems in the implementation of the temporary purchase and storage policy, when the domestic cotton has structural problems, people will still put their hopes on the cotton reserves.

When to turn out the cotton reserves and what price to turn out and which cotton to turn out will become the focus of attention.

During the period from July 10, 2015 to August 31st, the principle of "rotation of cotton reserves" was "to promote sustained and healthy development of industries, to guide the smooth operation of the market, to reduce the financial burden, and to improve the regulation mechanism of cotton reserves".

This has changed with the statement that the reserve policy "two guarantees and a stable" (stable cotton production, operators and cotton enterprises market expectations, protecting the interests of cotton farmers, and protecting the market supply) has changed. The state will lighten the financial burden as a principle for the rotation of cotton reserves.

There are two ways to lighten the financial burden. One is to go out at a high price, to narrow the difference between the price of the round bid and the purchase and storage price, and to reduce the direct financial loss. The two is to go out at the market price or below the market price, thereby reducing the inventory and reducing the expenditure of the state finance in the storage cost.

Predictably, under the current market situation, the high price round is obviously not feasible, and the paction will be unsatisfactory. It is also a waste of time and effort for the state to work out the plan and coordinate all the links to the final result.

On the contrary, it is low price, even in line with the international cotton price. Reserve cotton has the advantage of price and abundant resources. Under such circumstances, although the national finance seems to have lost the difference between the reserve price and the bid price, it actually not only revitalized the small and tight textile enterprises, but also promoted the recovery of cotton consumption, and also achieved the goal of eliminating inventory and reducing the financial burden.

At present, in the industry, the news about the storage of cotton wheels continues. The mainstream view is that the launch will start in March 2016. The reason why the industry pays so much attention to the turn out time is not just that the reserve cotton can alleviate the structural contradiction of the demand for textile enterprises, but also reflects the lack of an information disclosure mechanism from another perspective, and there is still room for improvement in the cotton reserve system.

The state has always stressed: "not only to make the market play a decisive role in the allocation of resources, to better play the role of the government; and to improve the modernization of the national management ability through the rule of law."

Projection to the cotton industry chain, the cotton reserve policy is actually how to let the market play a decisive role in the allocation of resources and better play the role of the government in the cotton industry.

When the market plays a normal role, the State Reserve is relegated to the second line; when the market fails, when needed, under the laws and regulations, the government can control the cotton market and deploy the cotton resources by swinging the flag of the reserve, and the effect is unmatched by any policy.

Therefore, the policy of cotton reserves should define the boundary between the government and the market. The "collection" and "exit" of the reserve cotton should be at the same frequency as the market pulse, and there should be a complete legal framework to stipulate the timing of the reserve policy.

China's economy has entered a new normal, and all walks of life also need to enter a new development space.

The cotton reserve policy, which has attracted much attention from the market, should first become a pacesetter in the reform and innovation of the cotton industry. This is the first step to clarify the boundary between the government and the market.

The future cotton reserve policy should also be closer to market demand, respond to the market crisis quickly, release the explicit anticipation ahead of time, give time to the market parties, so as to better play the role of reserve cotton, and also make the national financial funds in the real needs of the industrial chain.

Recently, the fourth China cotton industry elite forum will be held in Beijing. What will be the views of the leaders and guests attending the meeting on the reserve policy?