China’s economic ascendance over the past two decades has generated ripple effects in the world economy. Its search for natural resources to satisfy the demands of industrialization has led it to Sub-Saharan Africa. Trade between China and Africa in 2006 totaled more than $50 billion, with Chinese companies importing oil from Angola and Sudan, timber from Central Africa, and copper from Zambia. Demand from China has contributed to an upward swing in prices, particularly for oil and metals from Africa, and has given a boost to real GDP in Sub-Saharan Africa. Chinese aid and investment in infrastructure are bringing desperately needed capital to the continent. At the same time, however, strong Chinese demand for oil is contributing to an increase in the import bill for many oil-importing Sub- Saharan African countries, and its exports of low-cost textiles, while benefiting African consumers, is threatening to displace local production. China poses a challenge to good governance and macroeconomic management ...

The Growing Relationship Between China and Sub-Saharan Africa

The article reviews the book "China's Growing Role in World Trade," by Robert C. Feenstra and Shang-Jin Wei.

China’s Growing Role in World Trade

Detailed analysis of Land Use/Land Cover (LULC) using remote sensing data in complex irrigated basins provides complete profile for better water resource management and planning. Using remote sensing data, this study provides detailed land use maps of the Lower Chenab Canal irrigated region of Pakistan from 2005 to 2012 for LULC change detection. Major crop types are demarcated by identifying temporal profiles of NDVI using MODIS 250 m × 250 m spatial resolution data. Wheat and rice are found to be major crops in rabi and kharif seasons, respectively. Accuracy assessment of prepared maps is performed using three different techniques: error matrix approach, comparison with ancillary data and with previous study. Producer and user accuracies for each class are calculated along with kappa coefficients (K). The average overall accuracies for rabi and kharif are 82.83% and 78.21%, respectively. Producer and user accuracies for individual class range respectively between 72.5% to 77% and 70.1% to 84.3% for rabi and 76.6% to 90.2% and 72% to 84.7% for kharif. The K values range between 0.66 to 0.77 for rabi with average of 0.73, and from 0.69 to 0.74 with average of 0.71 for kharif. LULC change detection indicates that wheat and rice have less volatility of change in comparison with both rabi and kharif fodders. Transformation between cotton and rice is less common due to their completely different cropping conditions. Results of spatial and temporal LULC distributions and their seasonal variations provide useful insights for establishing realistic LULC scenarios for hydrological studies.

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Land use/land cover classification and its change detection using multi-temporal MODIS NDVI data

Agriculture contributes mainly to national economies specifically in developing countries, and cotton is an important cash crop. In certain countries, it is recognized as “white gold” since it is earning foreign exchange. In the world, cotton fiber is a distinguished fiber that serves as a raw material for textile industries having a yearly significant economic impact of at least $600 billion. Genetic diversity and its usage in getting sustainability of lint cotton and cotton yield, and usage of bio-based substitute such as procession and change in various biochemical, physiological, morphological and genetically significant traits. Nearly 25 M tons of total cotton is produced worldwide annually. Top ten cotton-producing countries are India, China, the United States, Pakistan, Brazil, Australia, Uzbekistan, Turkey, Turkmenistan, and Burkina Faso.

World Cotton Production and Consumption: An Overview

The value of world cotton production in 2000-01 has been estimated at about $20 billion, down from $35 billion in 1996-97 when cotton prices were 50 percent higher. Although cotton's share in world merchandise trade is insignificant (about 0.12 percent), it is very important to a number of developing countries. Cotton accounts for approximately 40 percent of total merchandise export earnings in Benin and Burkina Faso, and 30 percent in Chad, Mali, and Uzbekistan. Its contribution to GDP in these and other developing countries is substantial, ranging between 5 and 10 percent. Cotton supports the livelihoods of millions in developing countries (at least 10 million in West and Central Africa) where it is a typical, and often dominant, smallholder cash crop. The cotton market also has been subject to considerable market intervention-subsidization in the European Union and the United States, and taxation in Africa and Central Asia. During the past three seasons, annual direct support averaged $4.5 billion. The author reviews the market setting and policy issues and gives recommendations on how industrial and developing cotton-producing countries can improve the policy environment.

Cotton : Market setting, trade policies, and issues

The U.S. Department of Agriculture’s (USDA’s) first world 2013/14 cotton projections anticipate that, despite lower production and higher consumption, world stocks will rise for the fourth consecutive season. Global cotton production fell and consumption recovered during the current season, 2012/13, but China added more than 12 million bales to ending stocks as a result of setting domestic price support well above world market-clearing levels. China’s policies have driven world cotton market developments in 2012/13 and will continue to do so for the foreseeable future. Since China’s leadership has not indicated that changes are being considered, USDA is basing this preliminary outlook on a continuation of the policies affecting support prices, import levels, and release of the state reserve as of mid-February 2013. Changes to these policies would likely change the outlook; in particular, a decision to lower support prices and/or release more reserve stocks would pressure world prices.

The World and United States Cotton Outlook

The phaseout of the Multifiber Arrangement (MFA) and other forces are reshaping world textile and cotton markets. The elimination of the MFA is helping reduce clothing prices in the United States and the EU and effecting a shift in industrial demand for cotton to China, India, and Pakistan. At the same time, world cotton consumption has accelerated along with economic growth since 1999, especially in developing Asia, where an emerging consumer society is driving increases in household consumption of clothing and other cotton products. In the long run, income growth and technical change have more of an effect on world cotton consumption than the elimination of the MFA.

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The forces shaping world cotton consumption after the Multifiber Arrangement

Since China’s accession to the World Trade Organization (WTO) in December 2001, the growth of China’s textile industry has been the dominant factor shaping world cotton and textile markets. China’s textile and apparel (T&A) exports have grown by 50 percent and China has doubled its share of world T&A exports in less than a decade, to about 25 percent. Until 2005, T&A exports from China and other developing countries are constrained by quotas originally implemented by developed countries under the Multifibre Arrangement (MFA). Under the Uruguay Round’s Agreement on Textiles and Clothing (ATC), these quotas will be completely removed at the end of 2004. Given China’s export expansion with the quotas in place, many countries are concerned that China’s textiles will dominate the post-MFA world. This study examines the impact of the ATC’s implementation on China’s textile industry, and its impact in turn on China’s cotton sector. We find that freer trade under the ATC is expected to increase China’s net apparel exports, textile production, cotton consumption, cotton production, and cotton imports.

China’s manufacturing prowess has been repeatedly demonstrated since the 1980’s as China has come to dominate trade in one consumer product after another. Luggage, toys, and a number of other consumer goods at one time were sourced from a number of countries, but are now dominated by China. MFA restrictions meant T&A trade rules differed from other products, suggesting that the alignment of T&A rules with those governing other products will also permit production to once again shift to China. This would also have important implications for world cotton markets. Fluctuations in China’s import demand for cotton has been a key factor in cotton’s world price fluctuations for the last 20 years. Since 1999, China’s share of world cotton use for textile production has soared from the 22-25 percent share it held since 1980, up to 30 percent. China’s imports are expected to reach record levels in 2004, but as the world’s largest cotton producer, China has the potential to substantially reduce its imports, and possibly even export. The interaction between China’s growing demand for cotton and its ability to increase its production will determine the prospects of cotton exporters like the United States.

This study uses two modeling frameworks to examine the interaction between multilateral trade regime changes, global industrial restructuring for textiles and apparel, and China’s cotton consumption, production and trade. A dynamic computable general equilibrium (CGE) model was used to determine how the global restructuring of T&A apparel production and consumption would be realized as the end of the MFA brings T&A trade into the GATT rules governing the rest of world manufacturing trade. World trade change would be expected to change production by China’s textile industry, which in turn changes demand for textile fibers in China. An econometric partial equilibrium model of China’s agricultural sector was then used to examine the impacts of changing demand by the textile industry on China’s cotton consumption, regional cotton production, and cotton trade. The interaction between China’s demand for cotton and man-made fibers is also examined.

This study focuses solely on the impact of implementation of the ATC on world T&A trade. Historical trends suggest that world T&A trade can be expected to grow, and hence change in the world market structure may continue regardless of trade policy changes. The method used in our study does not allow us to predict future trends, or the pace of future structural change. The method we use is sometimes called a ‘counter-factual’ or scenario analysis, i.e., we ask questions such as given the trend in the growth and the change in the market structure, how will the implementation of the ATC add additional growth to world trade or cause further changes in world market structure? We use this counter-factual approach with both the CGE and the partial equilibrium models. 
The intertemporal CGE model used in this study is documented in Diao and Somwaru 2000, 2001. The econometric model of China’s agriculture used in this study is documented in Fang and Babcock 2003, and recently has been redeveloped by the department of Agricultural and Applied Economics, Texas Tech University (Pan, Mohanty and Ethridge, 2003). The study brings together these two models, relying on the CGE model’s global economy-wide coverage to capture the changes in the world economy that guide the development of China’s textile industry in the post-ATC world, and relying on the econometric model to analyze the response of China’s agricultural sector to the growth in its textile industry.

The data for the intertemporal CGE model used in this study are from the GTAP database version 6.1, (GTAP, 2003), including data about trade flows in the world and production and consumption in each country/region in 2002. The original data set includes 66 countries/regions and 57 aggregate sectors. For the purpose of this study, we aggregate the data into 14 countries/regions (see below) and 7 sectors, including cotton, other crops, livestock, processed food, textiles, apparel, and an aggregated manufacturing and services sector.

Preliminary results suggest while China’s T&A exports grow, world trade grows, and China’s textile imports also grow. Removal of MFA restrictions does not result in China dominating world trade and production even after 10 years of growth and investment under liberalized trade rules. Other Asian exporters also increase their apparel exports, some even more than China. China’s textile production does not grow as fast its apparel exports, and demand for cotton grows even more slowly. With production of cotton increasing as well, China’s cotton imports are not as strongly affected as some earlier studies have found.

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China's role in world cotton and textile markets

This report examines China’s 2011-13 attempt to maintain a high level of price support for its cotton producers, analyzing the policy’s motivation, its consequences to date, and the impacts of various adjustment alternatives China might pursue. With China’s wages rising rapidly in recent years, cotton production costs there have been rising faster than in the rest of the world. Rising costs both helped motivate China’s policymakers to strengthen their price support for cotton production in 2011 and ensured that the policy ultimately proved unsustainable. After several years of sharply lower cotton consumption and sharply rising state-owned stockpiles of cotton, China in 2014 began switching producer support to direct subsidies, and focusing support on producers in the largest producing region, Xinjiang. Additional reforms include plans to restore market forces to a leading role in determining China’s cotton prices. But China’s large role in world cotton markets and the unprecedented size of the government’s stocks mean that difficult choices lie ahead for China’s policymakers. Policy decisions in China will continue to have a significant impact on the rest of the world, and lower Chinese import quotas for cotton could reduce world cotton prices significantly.

Cotton Policy in China

This report address considerations in the 1995 farm bill debate for cotton, including market conditions, policy proposals, trade agreements, and the interactions between policy and markets for selected commodities. The Food Security Act of 1985, and subsequent cotton marketing loan modifications, are analyzed, as they formed the basic provisions of the Food, Agriculture, Conservation, and Trade Act of 1990. Cotton provisions of the 1990 Act attempted to ensure that cotton remained competitive in domestic and world markets. Program performance is discussed, including the effects on producers, consumers, and taxpayers. Important issues and policy options to be addressed during the 1995 farm bill debates are presented. Background information is also provided on the characteristics of the U.S. cotton industry including current trends in production, consumption, and foreign trade. Financial aspects of the cotton sector including prices, costs, and producer returns give additional perspective and understanding to the report.

Cotton: Background for 1995 Farm Legislation

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