The Trade Friction Is Very Urgent. How Can The Textile Enterprises Respond To The Rising Cost Of US Cotton Imports?

According to the customs and Border Protection Agency of the United States, the United States imported 25% customs duties on the first batch of 818 categories and $34 billion worth of Chinese products at 00:01 on July 6th (12:01 Beijing time 6).

As a counter measure, in June 16th, the State Council decided to impose a 25% tariff on 659 commodities originating in the United States of about 50 billion dollars, of which about 34 billion dollars of agricultural products were implemented from July 6, 2018.

US cotton import cost will increase by more than 3500 yuan / ton.

As cotton and cotton velvet are on the list, this has aroused widespread concern and thinking among professionals. What will happen? Before we get to the problem, we should first understand the current demand and scale of US cotton demand.

According to customs data, in 2017 1~12 months, China imported 1 million 153 thousand tons of cotton, including 505 thousand tons of cotton imported from the United States, an increase of 91.57% over the same period last year. In 2018 1~3 months, China imported 343 thousand and 800 tons of cotton, including 217 thousand tons of cotton imported from the United States, an increase of 6.67% over the same period last year.

Following the nearly doubling of US cotton imports in 2017, the number of imports of US cotton in 2018 is still increasing.

In fact, since the massive dumping in 2016, the national cotton stocks have dropped from about 11 million 140 thousand tons to 3 million 900 thousand tons in the near future. After the end of this year, the number of national cotton reserves will be reduced to about 250~300 million tons, reaching the border of safe stock. It is expected that after 2019, the national cotton will no longer be put into the net, but will be mainly driven by wheels. Correspondingly, in order to meet the gap between production and demand, China will import cotton to supplement its consumption. But the US cotton which originally thought it would fill our cotton gap in the future is full of uncertainty with the escalation of Sino US trade frictions.

The most obvious is the direct effect of tariffs on imported cotton. After raising tariffs, the rate of import of US cotton will increase from 1% to 26%, and the corresponding import cost will increase by 3500 yuan / ton directly. Tariff increases on import cost of cotton are obvious.

What is the import situation of China's cotton lint? In March 2018, the import of cotton short staple in China was 3611.676 tons, down 70.20% compared with the same period last year. In March, the main source of China's cotton lint imports came from four countries - Turkey, the United States, Turkmenistan and India. Among them, the United States accounted for 22.46%, ranking second, with an import volume of 793.535 tons, and third of Turkmenistan's cargo volume was very small compared with that of the United States, 785.594 tons, accounting for 22.23%.

The number of imported cotton linter dropped significantly in China. According to the current import situation, American cotton linter is not indispensable.

Trade wars are escalating, and companies are looking for alternative markets.

In June 14th this year, the national development and Reform Commission issued the notice on the application of import tariff quotas for the preferential tariff rates for cotton tariff quotas in 2018 (2018 No. seventh). This year, a certain amount of cotton tariff quotas, preferential tariff rates and import quota quotas (hereinafter referred to as cotton import sliding tax quotas) of 800 thousand tons are issued this year, all of which are non state trading quotas. This undoubtedly improves the initiative and decision power of Chinese enterprises to import cotton to a certain extent. As a result, the market of imported cotton sought by Chinese enterprises is more diversified.

Especially with the escalation of Sino US trade disputes, India cotton has attracted the attention of Chinese enterprises and has entered the "fast lane" of export.

According to the India Cotton Association, India has signed 500 thousand new cotton export orders with China, which is very rare. A cotton exporter in India also revealed that the company recently received many from China to India next year. cotton At the beginning of June, China had signed an export order for cotton shipped in 11~12 months this year. There are also some international cotton traders and export enterprises in India. High quality S-6, MCU5 and J34 are concerned and favored by some Chinese large and medium-sized textile enterprises. It can be seen that under the premise of China's introduction of US cotton import tariff, India cotton will have the opportunity to occupy a larger market share in China, but due to its production and quality constraints, it is not very optimistic.

A multinational company in Beijing has said that China will first purchase machinery, pollution-free. Australia cotton Brazil cotton instead of American cotton will be considered after India cotton because India cotton has a high impurity rate. But if there is no other option, China will spend more money on cotton processing, because even if it is added to the cost, it will be cost-effective to buy US cotton more than 25% of the import tariff.

Sun Huaibin, vice president of the China Textile Industry Federation and press spokesman, said that after the Levy of tariffs, some American cotton enterprises would be affected. Because of the high quality of American cotton, the quality of downstream products will also be affected. He suggested that enterprises should actively seek countermeasures to avoid risks. Generally speaking, Sino US trade frictions are long-lasting and repeatable, and there is uncertainty in turning risks into opportunities. The cotton spinning industry should also be taken seriously and treated with caution.

The United States opened fire on the world and opened fire on itself.

According to a number of Western media reports, such as Reuters, and a few hours after the United States launched a trade war with China, the US trade representative office immediately announced that the US enterprises that import products from China affected by the trade war could have 90 days to apply to the US government for "1 years' tariff exemption".

At the beginning of the trade war, the US trade representative office began to open up a "backdoor" to American enterprises importing Chinese products. This may be related to another thing mentioned in the Washington Post. That is, many of the Chinese products that the United States launched a trade war with China is actually not produced by China's own enterprises, but by products from the United States or other western countries in China.

In the Washington Post's own words, "because of the blunders of Trump's trade officials, these sanctions tariffs will not hurt many Chinese enterprises, instead, they regard the US and other non Chinese multinationals as their targets in China."

Indeed, only $about 20000000000 of the US $34 billion tariff list is produced by foreign-funded enterprises in China. If the US starts taxation, it will actually levy taxes on enterprises in China and other countries, including US funded enterprises. In short, the United States is firing on the world and opening fire to itself.

In fact, this trade war not only threatens the Chinese side to impose tariffs, but also threatens the trading partners of other countries and regions. Foreign Ministry spokesman Lu Kang said that not only China, including consumers in the US, and the US industry, including all the other economies in the world, and people all over the world, no one wants to fight a trade war. A trade war is bad for any country. It can only damage the industry of every country and damage the interests of consumers. Therefore, we do not want a trade war to be fought. However, if any country's legitimate interests are harmed, any country has the right to firmly defend its interests, which is beyond doubt.

Sheng Songcheng, the former director of the people's Bank of China's advisory and investigation statistics division, believes that although the US attitude is very tough, the United States also intends to avoid the category of goods that have a direct impact on its domestic consumers, judging from the products in the sanctions list. This obviously reflects that avoiding trade frictions upgrading is the common interest of China and the United States.

In fact, although China has a large trade surplus with the United States, consumers in the United States have gained cheap and good products. In essence, the comparative advantages of the two countries benefit the Chinese and American people. Meanwhile, the United States has maintained a favorable balance of trade in services for a long time, which not only increases the income of the United States, but also promotes the employment of the United States. In particular, the further expansion of the scope of additional tariffs will have a greater negative impact on the United States. The United States imports more than 70% of the total consumer goods, and has not yet been included in the list of taxes and daily necessities that are closely related to American life. China's exports account for more than 1/3 of the world's total exports. This means that if trade frictions are escalated, they may directly lead to rising prices in the US.

Recognize the gap and strive to enhance innovation capability.

The Ministry of Commerce said that China promised not to shoot the first shot, but in order to safeguard the core interests of the state and the interests of the masses, it had to be forced to make the necessary counterattack, and reiterated that it will unswervingly deepen reform and open wider to the outside world, protect the entrepreneurial spirit, strengthen the protection of property rights, and create a good business environment for all the countries in the world in China. For this levy, the Ministry of Commerce will continue to assess the impact of the enterprises concerned and try to take effective measures to help enterprises.

Faced with many uncertainties in the international market, how should our enterprises take full advantage of the forced mechanism of market environment to accelerate the spanformation of foreign trade development mode and foster new competitive advantages in foreign trade?

Cao Xuejun, deputy director of the consumer goods division of the Ministry of industry and commerce, said at a conference that now is a time of change, and our understanding and ideas must also be changed. She said, from the external environment, trade friction is constantly, from the inside, consumption also appears to upgrade green trend, so we have to change ideas and ideas, management requirements must keep up with changes. We also need to reflect on the sense of rules and intellectual property rights, which is very important for the development of the entire manufacturing industry and the domestic real economy.

How to deal with the uncertainty of the current market? Xia Lingmin, vice president of China Textile Industry Federation and President of China Textile Industrial Enterprise Management Association, said that the uncertainty of Sino US trade friction may be a normal in the short and medium term, which requires us to make adequate preparations. At the same time, we must correctly understand our current ability and level, do not relax blindly. In a fully competitive industry, we must not go back and not be complacent. The most important thing is to do well in our own business. First of all, from the perspective of domestic demand, it is necessary to build the domestic market well; secondly, we need to further enhance our innovation capability; we must persist in the pace of "going out" and create a new layout space along the "one belt and one road".

The people also pointed out that whether the real intention of the us to provoke the trade war is to contain China's technological progress or to "suppress the west" and contain the EU, it has made us soberly aware of China's position, weakness and development direction in the world economy at this stage. We must recognize the gap, strive to improve our ability to innovate, maintain our strength and do our work well. Time will be our best friend.

In 2017, China exported $47 billion 700 million of textiles and clothing to the United States, accounting for 17.4% of the total export volume of textiles and clothing for the whole year.

At the same time, last year, the United States was the second largest textile export destination of our country, accounting for 17%, although it was 18.2% lower than that of the European Union. clothing The negative effects of exports should not be underestimated, but we can also resolve them through diversification of the export market.