China aims to meet local cotton demand

China aims to be self-reliant on cotton supply while imports of the crop will likely rise to meet textile export demand, said officials attending an industry conference on Wednesday.

The gap between China's cotton output and demand will be a long-term tendency, and the shortage may further expand, said Liu Xiaonan, a deputy chief of the economic and trade department under the National Development and Reform Commission, during a cotton conference held in Dalian.

Liu said China aims to first meet its own consumption needs of cotton, and then to import more of the crop to meet processors' export demand, according to a transcript of the speech published on www.cottonchina.org, a website run by Cotlook Ltd, the China Cotton Association and the China National Cotton Exchange.

China's cotton demand is expected to rise to 13 million tonnes by 2015, Fang Yan, a deputy chief of the rural economy department under the NDRC, said citing data from the Ministry of Industry and Information Technology during the conference.

Fang said it was very difficult to boost China's cotton output, which fell 6.9 percent to 5.96 million tonnes in 2010 and has been falling since 2008.

Farmers prefer to plant grains, which receive more subsidies from the government and is not as labour intensive as cotton.

China's cotton imports account for 36 percent of the global cotton trade, a large part of which consist of material for textile exports, said Jiang Fan, a deputy chief of the foreign trade department under the Ministry of Commerce.

Big fluctuations in cotton prices since late last year have hit China's textile industry, causing local importers to default on contracts this year.

China imported 145,000 tonnes of cotton in May, down 27 percent from the same period last year and a 31 percent decline from April.

The country imported 2.09 million tonnes of cotton in the first nine months of the 2010/11 crop year, which started in September, while earlier this year industry participants had expected it to import more than 3 million tonnes in the crop year.

"It would be good enough if (China) can import 2.6 million to 2.7 million tonnes of cotton in 2010/11," said Dong Shuangwei, a manager with Capital Futures.

Analysts said high cotton stocks, which were purchased when prices were pricy, have dampened processors' interest to buy the crop, while consumption has been curbed by high prices.

"The on-year growth rate of (China's) apparel export volume in January-April was lower than 5 percent, while it was more than 15 percent in 2010," said Wang Qianjin, a senior analyst with industry.