National Development And Reform Commission: Cotton Used By Textile Enterprises Needs Smooth Tax Quota Will Be Issued Soon

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Since 2018, China has issued cotton import quota with preferential tariff rate beyond the quota for 5 consecutive years on the basis of 1% tariff quota, with the quantity ranging from 400000 to 800000 tons. As shown in the table below, the quota of sliding standard tax will be issued to non-state-owned trade cotton textile enterprises. Under this requirement, the quota will be allocated reasonably according to the needs of cotton consuming enterprises. From 2020 to 2022, the amount of quota for processing trade will be basically fixed at 400000 tons. "The first batch" is marked in the announcement, which means that the quota of import cotton sliding quota will be issued reasonably in the future according to market changes, so as to ensure the market supply and stabilize the market price.

After the official news is announced, all parties in the market may have some happiness and worry. For the processing trade factories, they will continue to guarantee their cotton needs and effectively control the cost of raw materials. However, for the domestic cotton market, according to Mysteel's agricultural products, up to now, Xinjiang's cotton sales in 2021 / 22 have only completed nearly 40%, which is nearly 35% slower than that in the same period in 2021. In the environment of low downstream demand and high price difference between internal and external cotton, the pressure on cotton sales enterprises to ship may continue to increase.

With the rapid development of domestic cotton textile market, China's long-term performance of cotton production is insufficient. In 2016 / 17, the production and demand gap expanded to more than 3.4 million tons. With the change of regional structure of cotton planting and the survival of the fittest in cotton textile production capacity, the gap between production and demand has narrowed to about 2.3 million tons in 2020 / 21. In order to ensure the market supply, some problems have been solved by releasing 894000 tons of cotton quota every year. However, under the environment of huge demand for cotton, rapid decline of reserve cotton inventory, decline of inventory consumption ratio and complex international economic and trade relations, the supply is still in short supply.

Therefore, it is very important for the long-term development of China's cotton textile market to issue a certain amount of cotton import sliding tax quota to ensure the long-term supply of cotton.

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