Required Report - public distribution

**Date:** 5/23/2008

**GAIN Report Number:** CH8037

CH8037

**China, Peoples Republic of**

**Cotton and Products**

**Annual**

**2008**

**Approved by:**

![](media/image1.wmf)Mark Petry

AgBeijing

**Prepared by:**

Jorge Sanchez and Wu Xinping

**Report Highlights:**

China\'s cotton imports are forecast at 3.7 million metric tons (MMT) in
marketing year (MY) 08/09, up from an estimated 2.7 MMT in MY07/08. This
import increase is based on expected growth of cotton use and a slight
decline in domestic production due to a reduction in the planted area in
response to higher returns from grain crops. Cotton consumption is
forecast at 11.8 MMT in MY08/09, up five percent from the previous year.
This relatively low growth is attributed to a combination of factors,
mainly the appreciation of the Chinese currency, that are limiting
growth in the textile sector. The supply and demand gap continues to
expand and is unlikely to be met by domestic production, thus cotton
exports to China will remain strong in the foreseeable future. In
MY08/09, the United States will continue to face fierce competition from
India, which will likely expand its market share in China.

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Annual Report

Beijing \[CH1\]

\[CH\]

Table of Contents

[Executive Summary 3](#executive-summary)

[Production 3](#production)

[Consumption 7](#consumption)

[Trade 9](#trade)

[Stocks 10](#stocks)

[Policy 11](#policy)

[Marketing 13](#marketing)

[Tables 14](#tables)

[Production, Supply and Demand (PSD)
14](#production-supply-and-demand-psd)

[Table 1. PSD in Bales 14](#table-1.-psd-in-bales)

[Table 2. PSD in Metric Tons 15](#table-2.-psd-in-metric-tons)

[Trade Tables 16](#trade-tables)

[Trade Tables 16](#__RefHeading___Toc199328828)

[Table 3. China's Monthly Cotton Imports
16](#table-3.-chinas-monthly-cotton-imports)

[Table 4. China's Quarterly Cotton Imports by Country of Origin
17](#table-4.-chinas-quarterly-cotton-imports-by-country-of-origin)

[Table 5. China's Monthly Cotton Exports
18](#table-5.-chinas-monthly-cotton-exports)

[Table 6. China's Quarterly Cotton Exports by Destination
19](#table-6.-chinas-quarterly-cotton-exports-by-destination)

[Table 7. China's Monthly Cotton Yarn and Thread Imports
20](#table-7.-chinas-monthly-cotton-yarn-and-thread-imports)

[Table 8. China's Quarterly Cotton Yarn and Thread Imports by Country of
Origin
21](#table-8.-chinas-quarterly-cotton-yarn-and-thread-imports-by-country-of-origin)

[Table 9. China's Monthly Cotton Yarn & Thread Exports
22](#table-9.-chinas-monthly-cotton-yarn-thread-exports)

[Table 10. China's Quarterly Cotton Yarn and Threads Exports by
Destination
23](#table-10.-chinas-quarterly-cotton-yarn-and-threads-exports-by-destination)

[Table 11. China's Monthly Cotton Fabric Imports
24](#table-11.-chinas-monthly-cotton-fabric-imports)

[Table 12. China's Quarterly Cotton Fabric Imports by Country of Origin
25](#table-12.-chinas-quarterly-cotton-fabric-imports-by-country-of-origin)

[Table 13. China's Monthly Cotton Fabric Exports
26](#table-13.-chinas-monthly-cotton-fabric-exports)

[Table 14. China's Quarterly Cotton Fabric Exports by Destination
27](#table-14.-chinas-quarterly-cotton-fabric-exports-by-destination)

[Table 15. Cotton Planted Area and Production by Province
28](#table-15.-cotton-planted-area-and-production-by-province)

[Table 16. Cotton Tariffs as of January 1, 2008
29](#table-16.-cotton-tariffs-as-of-january-1-2008)

[Table 17. Cotton Tariff Rate Quotas
31](#table-17.-cotton-tariff-rate-quotas)

# Executive Summary

China's cotton imports are forecast at 3.7 MMT in MY08/09, one MMT
higher than the estimated 2.7 MMT in MY07/08. The increase to the import
forecast is mainly attributable to a slightly smaller domestic
production of 7.7 MMT (compared to the 7.8 MMT in the previous year) and
expected growth in consumption. Due to anticipated higher returns from
grain crops, the domestic cotton planted area in MY08/09 is forecast at
5.8 million hectares (MHa), slightly down from the 5.9 MHa in the
previous year. The Government of China (GOC)'s policy continually favors
grain crops because of the limited availability of arable.

Cotton consumption in MY08/09 is forecast at 11.8 MMT, up five percent
over the previous year, while the consumption growth in MY07/08 is
estimated at four percent. The low yearly growth rate is the result of a
combination of factors that have been adversely impacting China's
textile industry since 2007. These factors include the additional
appreciation of the Chinese currency and reduced export tax rebate,
increased production costs (labor and inputs), and a tight credit policy
are expected to further squeeze profit margins of the sector in MY08/09.
However, China's cotton demand is expected to continue growing in the
near future. Cotton use is expected to be driven by China's massive
textile industry (with an estimated 100 million spindles), the growing
domestic demand for textile/apparel products, and the growing exports
subject to readjustment of product mix.

Because the supply and demand gap is expected to continue to expand and
is unlikely to be met by domestic production, cotton exports to China
will remain strong in the foreseeable future. In the interest of
protecting cotton farmers and supporting the development of the textile
industry, the GOC is expected to maintain the current trade policy on
cotton imports, including the Tariff Rate Quota (TRQ) and the variable
tariff rate regime, and to continue to regulate the domestic supply and
demand through the purchasing and sale of a state cotton reserve.

The lack of an official balance sheet for China's cotton market remains
unchanged. However, the results of China's 2^nd^ National Agriculture
Census (2^nd^ Ag Census) and the on-going cotton classification reform
are likely to facilitate adjustments to domestic production estimates.

# 

# 

# Production

China's cotton production for MY08/09 is forecast at 7.7 MMT, down from
an estimated 7.8 MT from MY07/08. This decrease is based on a slightly
smaller planted area with yields remaining similar to the previous year.
China's cotton planted area increased in 2006 and remained stable in
2007 mainly due to comparative revenue versus other crops (The area
estimate/forecast in this report is adjusted in line with the 2^nd^ Ag
Census results). However, in response to skyrocketing prices for
competing grain and oilseed crops in some cotton-producing regions in
2006 and early 2007, the cotton planted area in some provinces is
expected to decline slightly (See Table 15 for planted area and
production by province). The GOC's 2008 policies also favor grain crops
for grain security and to safeguard against the sudden increase in grain
prices. Though forecasts made by various national and provincial
government agencies are not in agreement, considering all sources, Post
favors the notion that the total cotton area is likely to decline
slightly. Below are some of the influential conclusions published by
some of the most prominent organizations in China's cotton production,
research, and analysis.

Planted area

Based on the planting intention survey conducted in January 2008, the
China Cotton Research Institute (CRI) forecast planting intentions for
MY08/09 will decline by one percent. CRI conducts annual cotton planting
intention surveys on fixed households. The current survey covered 3,956
cotton producing households in the 136 leading cotton-producing counties
nationwide. The survey also indicates that most of the interviewed farms
will maintain a similar cotton area versus the previous year in the
three major cotton-producing regions (see the following table). The
survey also indicates that the national average seed cotton price from
September 2007 to January 2008 is 20 percent higher than the previous
year. The majority (87 percent) of surveyed farmers in the Northwest
Region reported unchanged planting intentions in MY08/09, while the same
survey results for the non-Northwest regions was 60 percent. CRI argued
that a stable planting intention for most of China's cotton farmers is
attributable to the increase in seed cotton prices in 2007, while the
total area decline is in response to an anticipated higher purchasing
price for grain and oilseeds based on skyrocketing prices for grain and
oilseed products and increased subsidies for grain and oilseed crops.

CRI 2008 Cotton Planting Intention Survey Results

+---------------+-------+---------+---------+-------+-------+--------+
|               | No.   | No. of  | P       |       |       | Int    |
|               | of    |         | lanting |       |       | ention |
|               |       | hou     | in      |       |       | change |
|               | cou   | seholds | tention |       |       | %      |
|               | nties |         |         |       |       |        |
+---------------+-------+---------+---------+-------+-------+--------+
|               |       |         | Un      | Inc   | Dec   |        |
|               |       |         | changed | rease | rease |        |
+---------------+-------+---------+---------+-------+-------+--------+
| Nation        | 136   | 3,956   | 2512    | 635   | 809   | -0.9   |
|               |       |         | (63.5%) | (1    | (2    |        |
|               |       |         |         | 6.1%) | 0.4%) |        |
+---------------+-------+---------+---------+-------+-------+--------+
| Non-Northwest | 117   | 3,453   | 2,073   | 595   | 785   | -1.9   |
+---------------+-------+---------+---------+-------+-------+--------+
| \--Yangtze    | 51    | 1,734   | 1,086   | 302   | 346   | -1.3   |
| River Region  |       |         |         |       |       |        |
+---------------+-------+---------+---------+-------+-------+--------+
| \--Yellow     | 61    | 1,,549  | 828     | 284   | 437   | -0.3   |
| River Region  |       |         |         |       |       |        |
+---------------+-------+---------+---------+-------+-------+--------+
| \--Other      | 5     | 170     | 159     | 9     | 2     | +0.9   |
+---------------+-------+---------+---------+-------+-------+--------+
| Northwest     | 19    | 503     | 439     | 40    | 24    | +1.7   |
| Region        |       |         |         |       |       |        |
+---------------+-------+---------+---------+-------+-------+--------+

In Mid-March 2008, the China Cotton Association (CCA) released the
MY08/09 cotton planting intention survey conducted in February 2008. It
showed a two-percent increase based on results from 1,911 cotton farmers
in 13 cotton-producing provinces. The planting intention is generally
stable in the Northwest Region, but increases are expected in the
eastern and central provinces including Hubei and Anhui, and a decline
anticipated in Jiangsu Province. Relatively high cotton prices and
returns in 2007 have given farmers confidence in planting cotton. Post's
joint field study with CCA in Hebei Province and Tianjin Municipality
showed a stable to declining cotton planting intention. The farmers
interviewed in Hebei reported smaller cotton planted area as compared
with the previous year. Farmers complained that soaring prices for
agriculture inputs and higher labor inputs for cotton planting due to
increased outbreak of cotton diseases have resulted in lower profit
margins as compared to grain and oilseed crops.

The largest producer, Xinjiang province, will maintain a stable planted
area as the "unchanged" planting intentions are partly due to the lack
of alternative crops. According to the Xinjiang Statistics Bureau, the
2007 planted area was 1,380 thousand hectares (this is not adjusted
according to the 2^nd^ Ag Census). Cotton contributed US\$ 37 (RMB260)
out of the total US\$57 (RMB400) income growth for farmers in 2007.
Post's field study also showed Xinjiang's MY08/09 cotton area is likely
to remain the same as the previous year.

China's Ministry of Agriculture (MOA) has not released the cotton
planting intention survey results, however, they have set the target
area at 5,533 thousand hectares (83 million Mu) for MY08/09 (Note: this
area estimate is not adjusted according to the 2^nd^ Ag Census results).
MOA stressed that it prefers to maintain a stable cotton area and
increase farmers' profits through advancement in technology and
productivity.

The GOC's agriculture policy continues to favor grain crops, although
cotton planting seed subsidies are expected to continue. As reported in
GAIN CH7033, starting in 2007, MOA appropriated US\$72 million (500
million Yuan) to cotton planting seed companies to subsidize "high
quality varieties" at US\$32 per hectare (15 Yuan/Mu) (GAIN CH7033).
Industry sources reported that this subsidy will continue in 2008 with
the same amount and distribution plan that will cover an estimated 2.25
MHa of planted area in major cotton-producing regions. However, the
GOC's subsidy to grain crops increased further in 2008 and is much
higher than that of cotton. Grain farmers received a direct subsidy, an
agriculture input subsidy of US\$137 per hectare (RMB64 per Mu) and,
subsidies for purchasing large agriculture machinery.

China's National Statistics Bureau (NSB) adjusted the cotton planted
area for 2006 and 2007 based on the 2^nd^ Ag Census results. Most
industry insiders believe NSB data was grossly under-reported in the
recent years. In addition to the difficulties in estimating the planted
area for thousands of small cotton households, some relevant local
government agencies tend not to include newly added area into statistics
for various reasons. For instance, in response to the price/profit
changes and irrigation conditions, some land may occasionally used to
plant cotton. In a recent meeting with NSB, the relevant officials
informed Post that the cotton planted area appeared to be under-reported
in 2006 and 2007 based on the 2^nd^ Ag Census results. Most notably, the
revisions include the total planted area in Xinjiang which is now
revised 400,000 hectares higher than what was reported before, while
area for other regions was said to be over-reported by 130,000 hectares.
Although NSB released (in February 2008) a report indicating that the
2007 cotton area was 5.59 MHa, total area will likely exceed 5.86 MHa if
the 2^nd^ Ag Census results are taken into consideration. In mid-May
2008, NSB published the 2008 China Statistical Abstract with an adjusted
cotton planted area of 5.82 MHa and 5.92 MHa for 2006 and 2007,
respectively. Based on all available information, Post estimates the
cotton planted area at 5.94 MHA in MY07/08 and forecasts MY08/09 area at
5.88 MHa, down one percent from the previous year.

Chart 1. China's cotton planted area and production from 2003 to 2008

![](media/image2.wmf){width="3.225in" height="2.566666666666667in"}

Note: 2007 data is Post estimate and 2008 data is Post forecast

Area/production data before 2006 sourced from NSB

Yield

China's cotton yield reached a record of 1,312 Kg/Ha in MY07/08. The
continual improvement in yields is mainly attributable to technical
advancements in Xinjiang production and in the dissemination of Bt
cotton varieties in the Yangtze and Yellow River regions. A sustained
period of favorable weather conditions in most cotton producing regions
has also supported recent improvement to yields. Post forecasts that the
yields in MY08/09 are likely to remain near record levels at 1,311
Kg/Ha.

The coverage of Bt varieties is expected to increase further in MY08/09
mainly supported by the new seed subsidy policy. According to industry
sources, the area planted to Bt cotton varieties was estimated to exceed
3.5 MHa (85 percent of the total planted area in the Yangtze and Yellow
River regions in MY06/07). Some experts believe that Bt variety coverage
reached 100 percent in Henan, Hebei, Shandong and Anhui provinces.
Industry experts estimate that the planting of Bt varieties generally
improves yields by at least 10 percent compared with conventional seeds
and reduces the need for chemical sprays and labor inputs by 60 percent
and seven percent, respectively. The newly implemented seed subsidy
policy is likely to increase area coverage of "high quality varieties",
mostly Bt varieties. According to CRI's survey results, the number of
planted cotton varieties in 2006 increased but the area coverage for
each variety was low. Only 53 varieties were planted, each with area
coverage at 0.5 percent or more of the total planted area and the most
widely planted variety reached 5.9 percent.

In Xinjiang, Bt varieties are reportedly not planted due to fewer
outbreaks of diseases/pests. The development of conventional varieties
with specific traits such as dwarf plant size and early maturity are
expected to continue boosting yields. In addition, new agronomy
practices including high density sowing, plastic sheet covering and drip
irrigation technology contribute greatly to higher yields. These
advancements are particularly significant for Xinjiang Production and
Construction Corporation (PCC) farms. Industry sources reported that the
drip irrigated cotton area accounted for 80 percent of the PCC planted
area. The averaged yield in Xinjiang exceeded 1,710 Kg/Ha in MY06/07.
The MOA seed subsidy covers 63 percent of Xinjiang's planted area and
will enhance farmer confidence in cotton production.

NSB adjusted domestic cotton production based on the 2^nd^ Ag Census

Domestic cotton production has been under-estimated for the past few
years mainly due to the complexity of area estimate and lint ratio.
According to NSB, the results of the 2^nd^ Ag Census conducted in 2006
show that the national total cotton planted area was under reported by
about 267,000 Ha, with Xinjiang under-reported by 400,000 Ha while other
regions over reported by 133,000 Ha. The under-reporting in Xinjiang
reflects a very complicated attitude towards cotton data by various
levels of the local governments. Additionally, the yearly area estimate
is also a difficult task as some marginal land may not be included in
the annual statistics due to several factors such as irrigation and
relative per unit profit. The over-reporting in other regions, however,
indicates the complexity of statistics among the millions of small
households with a mix of several crops. The 2^nd^ Ag Census results also
show the lint ratio is under-estimated by four percent on average in
most cotton-producing provinces except Xinjiang. NSB explained that due
to advancement of agriculture and ginning technology, the current lint
ratio ranges between 37 to 38 percent instead of the 33 to 34 percent
used in past statistics. In Xinjiang, the lint ratio remains unchanged
at 38 percent.

In mid-May 2008, NSB published the 2008 China Statistical Abstract with
adjusted cotton production at 7.53 MMT and 7.62 MMT in 2006 and 2007,
respectively. However, NSB did not make adjustments to its official
production data in the years prior to 2006. Some industry leaders
estimated total un-reported cotton could reach up to 2.7 MMT from 2002
to 2005. In analyzing all available information, Post believes the
domestic production in MY06/07 is likely to be 7.6 MMT, based on 38
percent lint ratio for all other cotton regions except Xinjiang and the
adjusted area. As such, Post made production estimates for MY07/08 at
7.8 MMT and forecast for MY08/09 at 7.7 MMT.

# 

# Consumption

China's cotton consumption for MY08/09 is forecast at 11.8 MMT, five
percent greater than the revised estimate 11.2 MMT for MY07/08. This
growth rate is lower than that in the past three years. A combination of
negative factors including the appreciation of the local currency,
coupled with a reduction to the export tax rebate and tight credit
policies is expected to slow down the growth of cotton use in 2008.
However, in the long term, cotton consumption is expected to grow mainly
driven by domestic textile consumption and continued export growth.

China's textile industry has developed rapidly since China's accession
to the WTO, but the growth rate is likely to level off in the next few
years. According to industry sources, fixed asset investment in the
textile industry reached US\$35 billion (RMB255.2 billion) in 2007, up
26 percent over the previous year. This growth rate is slightly smaller
than the 27 percent increase in 2006. The GOC's macro-economic control
policy since 2007 restricted excessive investment in the sector.
Although the eastern and southern regions accounted for 65 percent of
the new investment, the central and western regions had higher
investment growth rates at 54 and 33 percent, respectively, as compared
to the 16 percent in the eastern and southern regions. This indicates
that the industry continued to move to the central provinces in 2007 in
search of lower labor inputs and favorable environmental and financial
policies. Industry sources estimated the total spindle count at 100
million, as of the end of 2007.

The textile industry will remain one of China's "pillar industries".
According to China's 11^th^ Five Year (2006-2010) Plan for Development
of the Textile Industry, total fiber production is forecast to reach 36
MMT by 2010, with an annual growth rate of six percent. Moreover, per
capita fiber consumption is expected to rise from 16.8 kg to 18 kg, an
annual growth rate of 6.7 percent. Employees involved in this sector are
forecast to reach 23 million, up from the current 20 million.

Sales of textiles and apparel are increasingly driven by domestic
consumption resulting from increased disposable income and population
growth. According to NSB, the per capita expenditure on clothing by
urban residents is 5.4 times that of rural people in 2006. Thus,
urbanization in China has a clear impact on the textile industry.
Nevertheless, as rural incomes rise, better clothing will be high on the
list of new purchases for China's 700 million rural residents. In 2007,
the sales of textile/apparel products in the domestic market maintained
a growth rate of over 20 percent. Total share of sales value in the
domestic market continued growing in 2007, accounting for 75 percent of
the industry output.

Based on industry statistics, China's textile and apparel exports for
2007 reached US\$175.6 billion, up 19 percent over 2006. However, this
is lower than the 25 percent growth in the previous year. The trade
surplus for the textile sector in 2007 was estimated at more than
US\$156.8 billion, accounting for 60 percent of the year's national
total. The price index for textile and apparel products increased by
four percent and 10 percent, respectively, attributed mainly to the
growth in export value. Exports for the first three months of 2008 were
valued at US\$37.4 billion, up 19 percent over the same period of the
previous year (See chart 3).

The textile/apparel product export growth is difficult to remain in the
next months of 2008. According to the China Textile Industry Association
(CTIA), although the average profit margin for the whole sector stood at
slightly less than four percent in 2007, more than 68 percent of textile
enterprises averaged profit margins less than one percent. Another way
of explaining this phenomena is that one third of the enterprises
contributed 91 percent of the sector's profit. The industry's profit
margins continued declining for most enterprises in the first months of
2008. The China Textile and Apparel Product Import/Export Association
estimated that the 2008 export growth rate at 13 percent. Industry
sources consider the appreciation of the Chinese currency, which
accelerated in the first quarter of 2008 up by four percent as compared
to the seven percent for the whole year in 2007, the main factor in
reducing typical double-digit growth rates. The reduced export tax
rebate enforced in 2007 continued to squeeze profit margins in 2008.
Additionally, the production costs (labor and energy and inputs)
increased by more than five percent. Chinese industry experts estimated
that the general production cost increased by more than 10 percent in
2008. Many export-oriented enterprises experienced reduced orders in
recent months due to fierce price competition. In summary, all these
factors are expected to restrict the growth of the industry and cotton
use in MY08/09.

Chart 3: China's Textile & Apparel Monthly Exports from 2004-2008

(Million US dollars)

![](media/image3.wmf){width="3.5083333333333333in"
height="2.558333333333333in"}

Source: Cncotton.com

Yarn production is forecast at 21.5 MMT in 2008, up 7.5 percent over
2007. Yarn production reached 20 MMT in 2007, up 15 percent over the
previous year. The average yearly growth from 2003 to 2007 was 23
percent. Yarn production for the first three months of 2008 is estimated
at 4.6 MMT, up less than 10 percent over the same period in 2007. In
consideration of all current negative factors impacting growth of the
textile industry, yarn production in the coming months will likely
maintain below 10 percent.

Chart 4: Chinese Yarn Production 2004-2008

![](media/image4.wmf){width="3.475in" height="1.9111111111111112in"}

Note: 2008 data forecast by Post

Converting yarn production into cotton use remains a challenge, as mills
constantly change the cotton ratio in yarn production based on market
demands and price ratios between cotton and man-made fibers. For
example, a percentage variation in the cotton share will drastically
alter cotton consumption by about two hundred thousand metric tons.
According to the China Chemical Fiber Industry Association, total
chemical fiber production stood at 23.9 MMT in 2007, up 18 percent over
the previous year. The volume used for spinning was estimated at 8.7
MMT. A National Development and Reform Commission (NDRC) report dated
February 2008 maintained that cotton's share of yarn production is
approximately 55 percent in contrast to the 60 percent figure in
previous statistics. As for the net waste (trash not suitable for
spinning), some mills reported that this ranges between 3 to 5 percent,
instead of the usual 6 percent used by many industry sources.

The high global crude oil price is likely to increase cotton's ratio in
yarn production in MY08/09. The current price for man-made fiber is
about US\$428/MT (RMB3,000 Yuan/MT) lower than cotton. Historically, the
cotton price is approximately 20 percent higher than the price of
polyester fibers. Industry experts expect that, along with the sharp
price rise of crude oil, the share of man-made fiber in yarn production
may decrease slightly in 2008.

# 

# Trade 

MY08/09 imports are forecast to surge to 3.7 MMT, up 37 percent from the
estimated 2.7 MMT in MY07/08. This massive increase to the import
forecast is based on a slightly smaller domestic production coupled with
an increase in consumption. More imports are the only way to meet the
expanding supply/demand gap because domestic production growth remains
limited.

Despite the drop in cotton imports in MY06/07, the United States
continued to be the largest import origin, followed by India and
Uzbekistan, accounting for 42, 23 and 11 percent of the total,
respectively. However, this changed significantly in MY07/08 with rapid
increase in share for Indian cotton. As of March 2008, total imported
volume from India reached 560,000 MT (35 percent), approaching the
633,000 MT from the United States (40 percent). This new trend is
expected by some industry insiders as a result of a large India crop.
The relatively cheap price and convenient delivery also makes Indian
cotton a competitive product in China's market. India traders are
actively engaged in promoting cotton in China. More than fifty Indian
traders participated in the 2008 China Cotton Industry Summit held in
May in Hangzhou, China. India cotton production is likely to continue
growing in the coming years along with the advancement of technical
expertise and the dissemination of Bt cotton. Although cotton originated
from the United States remains the best choice for Chinese users based
on quality and reliability of supply, it is expected to face fiercer
competition from Indian cotton in the next few years.

Consignment trade is likely to recover in MY08/09. Since 2004, increased
consignment trade has alleviated the impact of a declining stocks-to-use
ratio. In 2007, consignment trade became less active as a result of
reduced demand for imported cotton. It is widely expected that most
Chinese enterprises, in particular the medium and small-scale mills will
take a "hand to mouth" purchasing pattern in MY08/09. Consignment trade
has advantages such as short delivery time, flexibility, and convenient
quality verification. Industry insiders expect more domestic buyers will
choose consignment trade as a way to alleviate financial difficulties.

The CCA Cotton Trade Rules (applied to cotton imports only) were
published in April 2006 to replace the "China Textile Trade Rules". The
new rules highlight contract and quality fulfillment and liability. A
"black-list" system was established to encourage self-regulation and
strengthen the principle of contract sanctity. CCA "blacklisted" one
foreign trader in 2007
(http://www.china-cotton.org/english/enewsshow.php?articleid=161). Along
with increased imports from India, there were increased complaints about
the non-compliance of contracts. China's end-users reported problems
about Indian cotton such as weight shortages, non-compliance to the
contracted quality, and contamination.

# 

# Stocks

Stocks remain difficult to estimate. China still has not established an
official cotton market information system although several relevant
agencies are trying to develop supply and demand balance sheets. The
lack of transparent and reliable data (production, consumption and
stocks) is particularly true in recent years due to a rapid expansion
and diversified scales of production and quality. The numerous players
and diversified ownership in the industry chain, including the millions
of cotton farmers, gins, merchants and mills, make the collecting of
reliable production statistics an extremely difficult task.

Based on the 2^nd^ Ag Census, NSB adjusted the domestic cotton
production upward for 2006 and 2007. As mentioned above, the major
justification is under-reported planted area and under estimated lint
ratios by province. However, production data before 2006 is yet to be
re-calculated. Some industry leaders believe total cumulative
under-reported production from 2002 to 2005 could reach 2.7 MMT. More
time may be needed to justify these new statistics indexes (area and
lint ratio). However, in general, the 2^nd^ Ag Census results provide a
base for the domestic production estimate, and will inevitably alleviate
the burden of analyzing the supply/demand situation for MY08/09 and
beyond.

Experts believe that NSB yarn production statistics and man-made fiber
availability are relatively unreliable compared with import and export
statistics. Although converting yarn production into cotton use remains
a challenge, the total man-made fiber availability for spinning in the
same period does help in deducing the necessary cotton use.

Based on the above assumptions, Post added about 2.7 MMT of
underestimated domestic production to the beginning stocks of MY06/07
and removed all residual loss from MY06/07 and thereafter in the current
PSD table. The forecast ending stocks for MY08/09 are 2.4 MMT with the
stock-to-use ratio at 20 percent. The forecast recovery of "consignment
trade" may justify a relatively low stock-to-use ratio in MY08/09 (See
GAIN CH7033).

# Policy

Seed Subsidy Continued in 2008

In 2007, the GOC began to subsidize cotton production through a
multi-year "seed subsidy" program. MOA appropriated a total of US\$ 72
million (RMB500 million) to cotton seed producers/traders. Based on
industry sources, the same amount of funds was appropriated to
cotton-producing provinces to cover 2.25 MHa of the planted area
according to a distribution plan similar to the previous year (GAIN
CH7033). The subsidy is allocated to large seed producers/traders for
selected "high quality varieties" through an open bidding process. The
rate is approximately US\$32 per hectare (RMB15 per Mu). Based on
industry sources and Post's field study, it appears the funds have been
distributed efficiently.

Initiated by MOA and supported by the China Textile Industry Association
(CTIA), the seed subsidy policy is aimed at stabilizing planted area. It
is also expected that cotton quality will be more uniform because of
selected "high quality varieties" (seeds eligible to be subsidized) are
likely to increase in area coverage. Given the increasing cotton supply
gap and the importance placed on maintaining a stable planting area,
this policy is likely to remain in place in the foreseeable future.

Transportation of Xinjiang cotton likely to be subsidized in 2008

According to industry sources, the GOC decided to provide a
transportation subsidy for the shipment of cotton out of Xinjiang,
effective in late May or June 2008, although no details have been
released on how the subsidy will be implemented or the volume to be
subsidized. The shipment of outbound Xinjiang cotton is generally
hindered by a shortage of railcars. This situation worsened in MY07/08
mainly due to the snow/ice disaster in February in south China. Most
industry insiders believe this subsidy is likely to remain in place in
the coming years to ensure the shipment of cotton in a timely manner.

Classification Reform

China's cotton classification reform continued in MY07/08 and is
expected to move forward in MY08/09. According to the NDRC, as of the
end of 2007, 1,343 gins began to renovate equipment, of which 828
completed with total baling capacity of 4.5 MMT. According to the China
Fiber Inspection Bureau, 87 classification laboratories have been built
with 213 HVI instruments capable of classifying 4.3 MMT. In 2007, total
cotton processed based on the new classification system was more than
1.6 MMT, as compared to the 775,000 MT in the previous year. A series of
measures were taken and will continue in 2008 to push the reform
forward. The GOC will provide concession loans for equipment renovation
to the entities engaged in the reform, large bale cotton (based on the
new system) continues to be privileged in obtaining rail cars, and the
state purchasing of cotton for reserve continues to favor large baled
cotton. Post field studies also showed many cotton processing entities
took a more aggressive approach towards meeting the reform requirement
due in part to the pressure of being phased out of this fiercely
competitive marketplace. Industry sources reported that the GOC plans to
completely enforce the new classification system by 2010. If successful,
it will facilitate generating the domestic cotton production estimates
and upgrade the quality level of the ginning sector.

Tariff Rate Quota (TRQ)

The TRQ regime will remain in place for the foreseeable future as the
GOC argues that the TRQ regime is necessary to regulate the market and
protect the interests of both farmers and the domestic textile industry.
China's current willingness to expand the TRQ beyond its WTO commitments
should continue into the near future because the domestic production can
not meet the demand of the textile industry. As usual, China distributed
894,000 MT of cotton TRQ for 2008 (subject to one percent import duty)
at the end of 2007. According to industry sources, an additional 1.5 MMT
of cotton TRQ (additional TRQ) was distributed to mills in mid-April
2008 without official publication. A large volume of allocated TRQ for
2007 was not used mainly because of inadequate supply/demand
information. Industry sources indicated that mills/traders hesitated in
applying for additional TRQ because of the current relatively low price
for domestic cotton and an unpredictable textile market. Distribution
and allocation of the TRQ remains non-transparent.

The GOC adjusted the tariff rate applied to cotton imports under the
additional TRQ in 2008. The Ministry of Finance (MOFIN) announced that,
effective January 1, 2008, the variable tariff rates for cotton imports
under additional TRQ are adjusted to 5-40 percent, as compared to the
former 6-40 percent enforced in 2007. The slight reduction of import
duty is likely to reduce import costs in response to the increased
cotton price in global market. There has not been any new progress on
adjustment to Variable Tariff Rates for additional TRQ as speculated by
some industry experts.

State Reserves

The GOC maintains an unknown volume of state cotton reserves used to
regulate the domestic cotton market. State purchasing supports the
domestic cotton price and facilitates the marketing of domestic cotton.
It also enhances the ongoing classification reform by paying out a
premium for large bale cotton. State cotton reserves remain a secret and
are likely still a considerable amount. In January 2007, the China State
Cotton Reserve Corp purchased a total 300,800 MT through open bidding at
prices ranging from US\$1,788 to 1,814 per MT (RMB12,520 to 12,700 per
MT). In July 2007, when cotton was in tight supply, the GOC sold 300,000
MT of state cotton reserves to meet the market demand. The state cotton
reserve policy is expected to continue in the foreseeable future.

Targeted Loans

In 2007, the Agriculture Development Bank of China (ADBC) continued to
provide targeted loans with favorable terms for purchasing cotton in
2007. ADBC earmarked a record US\$7.7 billion for this program, up 28
percent over the year before. According to NDRC, as of the end of March
2008, ADBC provided loans for more than 4.4 MMT of the 2007 crop, up 14
percent over the previous year. Xinxiang's loans reached a record of
US\$3.7 billion covering more than 2.1 MMT of the MY07/08 crop in the
province, up 13 percent over the previous year. The increase in loans is
a result of the low default rates for the previous years' loans and a
large crop at a relatively higher price in MY07/08. In the ADBC meeting
held in January 2008, the ADBC president vowed to continue financially
assistance for domestic cotton marketing in MY08/09.

Export Rebate

The tax rebate for textile and apparel exports is likely to remain
unchanged in 2008. In an effort to ease trade tensions with other trade
partners and the growing trade surplus, the GOC reduced the tax rebate
for apparel products to 11 from 13 percent and man-made fiber to five
percent from 13 percent in 2007. An earlier industry speculation
suggests that this will be further reduced in MY08/09 and mainly aimed
at further reducing the trade surplus. However, in March 2008, CTIA
reported that two thirds of the enterprises suffered serious losses
because of a combination of adverse factors including the appreciation
of Chinese currency, the increase of production costs, and a tight
credit policy in the financial sector. In response to the industry's
call for greater policy support, the GOC conducted a field survey in
April 2008 to evaluate the situation. Some measures might be formulated
soon based on the survey results. In an industry meeting held in mid-May
2008, a senior official from CTIA assured the industry that the tax
rebate for textile and apparel exports will remain unchanged at 11
percent and further cuts were unlikely in the near future in
consideration of the current difficult situation faced by the sector.

# 

# Marketing

The marketing of domestic cotton is expected to improve in MY08/09.
Instead of focusing on regulating purchases of seed cotton, the GOC
raised the market access threshold for enterprises entering cotton
processing. On October 2006, NDRC and other related ministries issued
Decree on "Administrative Measures for Accreditation of Eligibility of
Cotton Processing and Marketing". The Decree is aimed at enhancing the
management of the industry and checking its excessive expansion. The
decree requested that all cotton processing entities meet certain
requirements and be awarded with a "Cotton Processing License". In
addition to enforcement of this decree and the classification reform, it
is also expected to accelerate the consolidation of the industry. Based
on NDRC's plan for the cotton processing industry, the number of gins is
expected to decline to 2,400 by the end of 2009 from the current
estimated 12,000. According to NDRC, as of the end of March 2008, 96
percent of the 2007 domestic crop (seed cotton) was marketed, slightly
higher than the 95 percent in the previous year; 95 percent of the seed
cotton was processed while 66 percent of ginned cotton was marketed,
both slightly higher than the previous year.

Transporting cotton out of Xinjiang in MY07/08 was slowed by devastating
storms that hit Southern China last February. According to NDRC, as of
the end of March 2008, total cotton shipped out of Xinjiang reached 1.67
MMT, down by 180,000 MT as compared with the previous year. The winter
storms halted transportation for several weeks. The central and local
governments publically committed to making cotton shipments a priority
in the remaining months of MY07/08 and in MY08/09. As mentioned above,
the GOC is currently formulating a policy to provide subsidies for
cotton out of Xinjiang and the detailed subsidy rules will be finalized
in late may or June. This policy is expected to improve the shipment of
cotton out of Xinjiang in MY08/09.

The GOC already approved some international traders to engage in
domestic cotton trade. These traders, however, are taking a cautious
approach to entering the domestic cotton market because of its size and
complexity. There has been little intention on the market engagement of
international traders in the marketing of domestic cotton.

U.S. cotton exporters interested in exporting cotton to China and want
marketing advice and assistance may contact USDA/FAS's Agricultural
Trade Offices (ATO) in Beijing, Chengdu, Shenyang, Shanghai, and
Guangzhou. They can be contacted via email at <ATOShanghai@usda.gov>,
<ATOBeijing@usda.gov>, <ATOGuangzhou@usda.gov>, <ATOChengdu@usda.gov>,
and <ATOShenyang@usda.gov>, respectively. Cotton Council International
(CCI) is also actively involved in promoting U.S. cotton in China and
throughout Asia. CCI serves China regionally from its Hong Kong Office.
CCI can be reached via email at <cci-hongkong@cotton.org>. Both CCI and
the ATO's organize events designed to bring U.S. cotton exporters in
close contact with Chinese buyers.

China International Cotton Conference, a biannual event sponsored by
CCA, MOA and FAO, attracts a worldwide audience from the cotton/textile
industry. The next conference will be in 2009. CCA, in collaboration
with China National Cotton Exchange also holds an annual event-China
Cotton Industry Development Forum focusing on analysis and outlook of
the market situation. The 2008 Forum was held in Hangzhou/Zhejiang
Province in May.

##  

# Tables

## Production, Supply and Demand (PSD)

### Table 1. PSD in Bales

## 

  ---------------- ------------------ ---------- ----------- ------------ ---------- ----------- ------------ ---------- -----------
  **PSD Table**                                                                                                          

  **Country**      **China, Peoples                                                                                      
                   Republic of**                                                                                         

  **Commodity**    **Cotton**                                                                                            
                   (HECTARES)1000 480                                                                                    
                   lb. Bales                                                                                             
                   (PERCENT)(KG/HA)                                                                                      

                   **2006 Revised**                          **2007                              **2008                  
                                                             Estimate**                          Forecast**              

                   USDA\              Post\      Post\       USDA\        Post\      Post\       USDA\        Post\      Post\
                   Official           Estimate   Estimate\   Official     Estimate   Estimate\   Official     Estimate   Estimate\
                                                 New                                 New                                 New

  **Market Year                       08-2006    08-2006                  08-2007    08-2007                  08-2008    08-2008
  Begin**                                                                                                                

  Area Planted     0                  5400       5900        0            5500       5940        0            0          5880

  Area Harvested   6000               5400       5900        6100         5500       5940        0            0          5880

  Beginning Stocks 20311              8073       20474       18711        8010       16274       16386        8127       12968

  Production       35500              31000      34900       35000        29850      35800       0            0          35400

  Imports          10588              15380      10588       12250        22970      12400       0            0          16995

  MY Imports from  0                  0          0           0            0          0           0            0          0
  U.S.                                                                                                                   

  **Total Supply** 66399              54453      65799       65961        60830      64311       16386        8127       65200

  Exports          88                 46         88          75           23         66          0            0          0

  Use              50000              50500      49600       53000        56500      51440       0            0          54200

  Loss             -2400              -4103                  -3500        -3820      0           0            0          0

  Total Dom. Cons. 47600              46397      49600       49500        52680      51440       0            0          54200

  Ending Stocks    18711              8010       16274       16386        8127       12968       0            0          11163

  **Total          66399              54453      65799       65961        60830      64311       0            0          65200
  Distribution**                                                                                                         

  Stock to Use %   37.35              15.84      32.42       30.87        14.37      24.86       0            0          20.29

  Yield            1288               1250       1288        1249         1182       1312        0            0          1311
  ---------------- ------------------ ---------- ----------- ------------ ---------- ----------- ------------ ---------- -----------

##  

### Table 2. PSD in Metric Tons 

## 

<table>
<colgroup>
<col style="width: 15%" />
<col style="width: 9%" />
<col style="width: 10%" />
<col style="width: 9%" />
<col style="width: 9%" />
<col style="width: 9%" />
<col style="width: 9%" />
<col style="width: 7%" />
<col style="width: 8%" />
<col style="width: 9%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="10"><strong>PSD Table</strong></td>
</tr>
<tr class="even">
<td><strong>Country</strong></td>
<td colspan="9"><strong>China, Peoples Republic of</strong></td>
</tr>
<tr class="odd">
<td><strong>Commodity</strong></td>
<td colspan="9"><strong>Cotton</strong> (HECTARES)1000 MT
(PERCENT)(KG/HA)</td>
</tr>
<tr class="even">
<td></td>
<td colspan="3"><p>2006</p>
<p>Revised</p></td>
<td colspan="3"><p>2007</p>
<p>Estimate</p></td>
<td colspan="3"><p>2008</p>
<p>Forecast</p></td>
</tr>
<tr class="odd">
<td></td>
<td>USDA<br />
Official</td>
<td>Post<br />
Estimate</td>
<td>Post<br />
Estimate<br />
New</td>
<td>USDA<br />
Official</td>
<td>Post<br />
Estimate</td>
<td>Post<br />
Estimate<br />
New</td>
<td>USDA<br />
Official</td>
<td>Post<br />
Estimate</td>
<td>Post<br />
Estimate<br />
New</td>
</tr>
<tr class="even">
<td><strong>Market Year Begin</strong></td>
<td></td>
<td>08-2006</td>
<td>08-2006</td>
<td></td>
<td>08-2007</td>
<td>08-2007</td>
<td></td>
<td>08-2008</td>
<td>08-2008</td>
</tr>
<tr class="odd">
<td>Area Planted</td>
<td>0</td>
<td>5400</td>
<td>5900</td>
<td>0</td>
<td>5500</td>
<td>5940</td>
<td>0</td>
<td>0</td>
<td>5880</td>
</tr>
<tr class="even">
<td>Area Harvested</td>
<td>6000</td>
<td>5400</td>
<td>5900</td>
<td>6100</td>
<td>5500</td>
<td>5940</td>
<td>0</td>
<td>0</td>
<td>5880</td>
</tr>
<tr class="odd">
<td>Beginning Stocks</td>
<td>4422</td>
<td>1758</td>
<td>4458</td>
<td>4074</td>
<td>1744</td>
<td>3543</td>
<td>3568</td>
<td>1769</td>
<td>2823</td>
</tr>
<tr class="even">
<td>Production</td>
<td>7729</td>
<td>6749</td>
<td>7599</td>
<td>7620</td>
<td>6499</td>
<td>7794</td>
<td>0</td>
<td>0</td>
<td>7707</td>
</tr>
<tr class="odd">
<td>Imports</td>
<td>2305</td>
<td>3349</td>
<td>2305</td>
<td>2667</td>
<td>5001</td>
<td>2700</td>
<td>0</td>
<td>0</td>
<td>3700</td>
</tr>
<tr class="even">
<td>MY Imports from U.S.</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="odd">
<td><strong>Total Supply</strong></td>
<td>14457</td>
<td>11856</td>
<td>14326</td>
<td>14361</td>
<td>13244</td>
<td>14002</td>
<td>3568</td>
<td>1769</td>
<td>14196</td>
</tr>
<tr class="even">
<td>Exports</td>
<td>19</td>
<td>10</td>
<td>19</td>
<td>16</td>
<td>5</td>
<td>14</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="odd">
<td>Use</td>
<td>10886</td>
<td>10995</td>
<td>10799</td>
<td>11539</td>
<td>12301</td>
<td>11200</td>
<td>0</td>
<td>0</td>
<td>11801</td>
</tr>
<tr class="even">
<td>Loss</td>
<td>-523</td>
<td>-893</td>
<td>0</td>
<td>-762</td>
<td>-832</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="odd">
<td>Total Dom. Cons.</td>
<td>10364</td>
<td>10102</td>
<td>10799</td>
<td>10777</td>
<td>11470</td>
<td>11200</td>
<td>0</td>
<td>0</td>
<td>11801</td>
</tr>
<tr class="even">
<td>Ending Stocks</td>
<td>4074</td>
<td>1744</td>
<td>3543</td>
<td>3568</td>
<td>1769</td>
<td>2823</td>
<td>0</td>
<td>0</td>
<td>2430</td>
</tr>
<tr class="odd">
<td><strong>Total Distribution</strong></td>
<td>14457</td>
<td>11856</td>
<td>14326</td>
<td>14361</td>
<td>13244</td>
<td>14002</td>
<td>0</td>
<td>0</td>
<td>14196</td>
</tr>
<tr class="even">
<td>Stock to Use %</td>
<td>37.4</td>
<td>15.8</td>
<td>32.4</td>
<td>30.9</td>
<td>14.4</td>
<td>24.9</td>
<td>0.0</td>
<td>0.0</td>
<td>20.3</td>
</tr>
<tr class="odd">
<td>Yield</td>
<td>1288</td>
<td>1250</td>
<td>1288</td>
<td>1249</td>
<td>1182</td>
<td>1312</td>
<td>0</td>
<td>0</td>
<td>1311</td>
</tr>
</tbody>
</table>

##  

## Trade Tables

### Table 3. China's Monthly Cotton Imports 

  ------------- ------------------- ------------------- ------------------- ------------------- -------------------
  **Unit:                                                                                       
  Metric Tons**                                                                                 

  **Month**     **2004**            **2005**            **2006**            **2007**            **2008**

  January       177,400             113,076             301,372             123,092             157,712

  February      291,481             70,599              321,280             125,235             158,168

  March         269,209             101,487             495,049             259,846             213,221

  April         290,953             169,815             490,704             215,093              

  May           227,075             160,891             463,809             201,205              

  June          201,312             206,024             380,674             252,460              

  July          170,478             294,416             290,358             228,945              

  August        107,566             373,295             285,958             258,667              

  September     58,710              313,304             134,364             234,451              

  October       29,148              198,167             84,985              137,031              

  November      22,844              224,991             154,592             101,846              

  December      59,975              347,517             240,338             322,575              

  **TOTAL**     1,906,153           2,573,582           3,643,482           2,460,445            

  **Marketing   **Aug/04-Jul/05**   **Aug/05-Jul/06**   **Aug/06-Jul/07**   **Aug/07-Jul/08**   **Aug/08-Jul/09**
  Year**                                                                                        

  **TOTAL**     1,393,551           4,200,521           2,306,112                                

                                                                                                

  **Unit:                                                                                       
  480-lb                                                                                        
  Bales**                                                                                       

  **Month**     **2004**            **2005**            **2006**            **2007**            **2008**

  January       814,800             519,358             1,384,200           565,359             724,373

  February      1,338,773           324,263             1,475,641           575,205             726,468

  March         1,236,479           466,128             2,273,762           1,193,474           979,323

  April         1,336,348           779,959             2,253,801           987,920              

  May           1,042,954           738,972             2,130,276           924,135              

  June          924,626             946,269             1,748,434           1,159,550            

  July          783,005             1,352,252           1,333,612           1,051,545            

  August        494,052             1,714,546           1,313,403           1,188,058            

  September     269,655             1,439,007           617,133             1,076,833            

  October       133,878             910,179             390,338             629,382              

  November      104,925             1,033,385           710,040             467,777              

  December      275,465             1,596,146           1,103,872           1,481,585            

  TOTAL         8,754,960           11,820,464          16,734,513          11,300,825           

  **Marketing   **Aug/04-Jul/05**   **Aug/05-Jul/06**   **Aug/06-Jul/07**   **Aug/07-Jul/08**   **Aug/08-Jul/09**
  Year**                                                                                        

  **TOTAL**     6,400,580           19,292,992          10,591,973                               
  ------------- ------------------- ------------------- ------------------- ------------------- -------------------

Source: World Trade Atlas

### Table 4. China's Quarterly Cotton Imports by Country of Origin

**Unit: Metric Tons**

  ------------- ----------- ------------ ---------------- ---------------- -----------
  **Marketing                                                              
  Year:                                                                    
  2005/2006**                                                              

  **Country**   **Jul-Sep   **Oct-Dec    **Jan-Mar/06**   **Apr-Jun/06**   **TOTAL**
                /05**       /05**                                          

  United States 496,237     272,891      455,574          734,824          1,959,525

  India         39,120      54,221       178,765          231,596          503,702

  Uzbekistan    87,251      50,961       161,595          104,914          404,720

  Australia     100,184     91,690       39,597           51,665           283,136

  Burkina Faso  57,483      49,077       25,025           39,956           171,541

  Benin         52,113      36,636       32,262           21,870           142,881

  Mali          32,633      24,341       22,209           28,386           107,570

  Brazil        4,507       43,742       38,781           3,969            90,999

  Cameroon      7,898       18,673       19,549           10,654           56,775

  Mexico        4,094       13,608       19,162           4,632            41,496

  Other         99,495      114,834      125,182          102,722          442,234

  **TOTAL**     981,016     770,675      1,117,702        1,335,187        4,204,579

  **Marketing                                                              
  Year:                                                                    
  2006/2007**                                                              

  **Country**   **Jul-Sep   **Oct-Dec    **Jan-Mar/07**   **Apr-Jun/07**   **TOTAL**
                /06**       /06**                                          

  United States 420,152     97,556       94,809           366,679          979,197

  India         60,220      123,049      260,892          100,278          544,439

  Uzbekistan    52,206      45,107       87,454           73,777           258,544

  Australia     61,353      72,146       7,556            29,059           170,113

  Burkina Faso  23,059      57,417       29,000           34,570           144,047

  Cameroon      13,996      23,468       4,834            11,694           53,992

  Benin         4,220       4,712        5,835            26,098           40,866

  Mali          21,862      9,356        597              5,077            36,892

  Zambia        6,113       10,280       716              117              17,226

  Mexico        0           5,664        4,782            4,118            14,564

  Other         47,497      31,160       11,699           17,290           107,645

  **TOTAL**     710,679     479,915      508,173          668,758          2,367,525

  **Marketing                                                              
  Year:                                                                    
  2007/2008**                                                              

  **Country**   **Jul-Sep   **Oct-Dec    **Jan-Mar/08**   **Apr-Jun/08**   **TOTAL**
                /07**       /07**                                          

  India         55,392      216,650      295,524                           567,565

  United States 475,248     188,013      134,116                           797,377

  Uzbekistan    33,332      21,088       17,555                            71,974

  Burkina Faso  33,501      15,523       14,555                            63,579

  Mexico        4,477       12,760       14,016                            31,253

  Mali          10,568      6,793        13,226                            30,587

  Cameroon      11,651      13,173       7,491                             32,315

  Brazil        4,646       16,813       6,288                             27,747

  Australia     42,356      30,649       6,192                             79,197

  Benin         20,701      6,928        4,374                             32,003

  Other         30,194      33,060       15,765                            79,019

  **TOTAL**     722,063     561,451      529,102                           1,812,616
  ------------- ----------- ------------ ---------------- ---------------- -----------

Source: World Trade Atlas[\
]{dir="rtl"}

### Table 5. China's Monthly Cotton Exports 

[]{dir="rtl"}

+-----------+------------+-----------+-----------+----------+---------+
| []{d      |            |           |           |          |         |
| ir="rtl"} |            |           |           |          |         |
|           |            |           |           |          |         |
| **Unit:   |            |           |           |          |         |
| Metric    |            |           |           |          |         |
| Tons**    |            |           |           |          |         |
+-----------+------------+-----------+-----------+----------+---------+
| **Month** | **2004**   | **2005**  | **2006**  | **2007** | *       |
|           |            |           |           |          | *2008** |
+-----------+------------+-----------+-----------+----------+---------+
| January   | 1,150      | 204       | 1,450     | 2,404    | 221     |
+-----------+------------+-----------+-----------+----------+---------+
| February  | 1,323      | 59        | 581       | 362      | 393     |
+-----------+------------+-----------+-----------+----------+---------+
| March     | 1,151      | 359       | 0         | 2,149    | 811     |
+-----------+------------+-----------+-----------+----------+---------+
| April     | 399        | 711       | 488       | 2,634    |         |
+-----------+------------+-----------+-----------+----------+---------+
| May       | 205        | 509       | 944       | 932      |         |
+-----------+------------+-----------+-----------+----------+---------+
| June      | 77         | 861       | 2,198     | 2,656    |         |
+-----------+------------+-----------+-----------+----------+---------+
| July      | 1,806      | 810       | 665       | 1,038    |         |
+-----------+------------+-----------+-----------+----------+---------+
| August    | 1,023      | 250       | 1,179     | 880      |         |
+-----------+------------+-----------+-----------+----------+---------+
| September | 1,044      | 52        | 1,229     | 835      |         |
+-----------+------------+-----------+-----------+----------+---------+
| October   | 790        | 208       | 1,589     | 2,709    |         |
+-----------+------------+-----------+-----------+----------+---------+
| November  | 172        | 382       | 1,142     | 2,887    |         |
+-----------+------------+-----------+-----------+----------+---------+
| December  | 143        | 719       | 1,572     | 1,608    |         |
+-----------+------------+-----------+-----------+----------+---------+
| **TOTAL** | 9,283      | 5,124     | 13,039    | 21,094   |         |
+-----------+------------+-----------+-----------+----------+---------+
| **        | **Aug/0    | **Aug/05  | **Aug/06  | *        | **A     |
| Marketing | 4-Jul/05** | -Jul/06** | -Jul/07** | *Aug/07- | ug/08-J |
| Year**    |            |           |           | Jul/08** | ul/09** |
+-----------+------------+-----------+-----------+----------+---------+
| **TOTAL** | 6,685      | 7,938     | 18,887    |          |         |
+-----------+------------+-----------+-----------+----------+---------+
| **Unit:   |            |           |           |          |         |
| 480-lb    |            |           |           |          |         |
| Bales**   |            |           |           |          |         |
+-----------+------------+-----------+-----------+----------+---------+
| **Month** | **2004**   | **2005**  | **2006**  | **2007** | 2008    |
+-----------+------------+-----------+-----------+----------+---------+
| January   | 5,281      | 939       | 6,662     | 11,044   | 1,015   |
+-----------+------------+-----------+-----------+----------+---------+
| February  | 6,075      | 269       | 2,668     | 1,663    | 1,805   |
+-----------+------------+-----------+-----------+----------+---------+
| March     | 5,285      | 1,650     | 0         | 9,871    | 3,726   |
+-----------+------------+-----------+-----------+----------+---------+
| April     | 1,834      | 3,266     | 2,241     | 12,100   |         |
+-----------+------------+-----------+-----------+----------+---------+
| May       | 940        | 2,337     | 4,337     | 4,278    |         |
+-----------+------------+-----------+-----------+----------+---------+
| June      | 355        | 3,955     | 10,097    | 12,197   |         |
+-----------+------------+-----------+-----------+----------+---------+
| July      | 8,295      | 3,722     | 3,056     | 4,767    |         |
+-----------+------------+-----------+-----------+----------+---------+
| August    | 4,700      | 1,148     | 5,417     | 4,040    |         |
+-----------+------------+-----------+-----------+----------+---------+
| September | 4,796      | 241       | 5,647     | 3,837    |         |
+-----------+------------+-----------+-----------+----------+---------+
| October   | 3,627      | 954       | 7,300     | 12,444   |         |
+-----------+------------+-----------+-----------+----------+---------+
| November  | 790        | 1,753     | 5,245     | 13,260   |         |
+-----------+------------+-----------+-----------+----------+---------+
| December  | 656        | 3,302     | 7,220     | 7,385    |         |
+-----------+------------+-----------+-----------+----------+---------+
| **TOTAL** | 42,636     | 23,535    | 59,890    | 96,886   |         |
+-----------+------------+-----------+-----------+----------+---------+
| **        | **Aug/0    | **Aug/05  | **Aug/06  | *        | **A     |
| Marketing | 4-Jul/05** | -Jul/06** | -Jul/07** | *Aug/07- | ug/08-J |
| Year**    |            |           |           | Jul/08** | ul/09** |
+-----------+------------+-----------+-----------+----------+---------+
| **TOTAL** | 30,704     | 36,459    | 86,750    |          |         |
+-----------+------------+-----------+-----------+----------+---------+

[]{dir="rtl"}

Source: World Trade Atlas

### Table 6. China's Quarterly Cotton Exports by Destination

**Unit: Metric Tons**

+-----------------+--------+----------+----------+---------+---------+
| **Marketing     |        |          |          |         |         |
| Year:           |        |          |          |         |         |
| 2005/2006**     |        |          |          |         |         |
|                 |        |          |          |         |         |
|                 |        |          |          |         |         |
+-----------------+--------+----------+----------+---------+---------+
| **Country**     | **J    | *        | *        | **      | **      |
|                 | ul-Sep | *Oct-Dec | *Jan-Mar | Apr-Jun | TOTAL** |
|                 | /05**  | /05**    | /06**    | /06**   |         |
+-----------------+--------+----------+----------+---------+---------+
| Taiwan          | 0      | 360      | 0        | 490     | 849     |
+-----------------+--------+----------+----------+---------+---------+
| Indonesia       | 296    | 314      | 55       | 840     | 1,505   |
+-----------------+--------+----------+----------+---------+---------+
| Korea, South    | 27     | 181      | 87       | 261     | 557     |
+-----------------+--------+----------+----------+---------+---------+
| Japan           | 504    | 31       | 430      | 951     | 1,915   |
+-----------------+--------+----------+----------+---------+---------+
| Thailand        | 286    | 0        | 0        | 137     | 424     |
+-----------------+--------+----------+----------+---------+---------+
| Hong Kong       | 0      | 416      | 1,280    | 492     | 2,188   |
+-----------------+--------+----------+----------+---------+---------+
| Other           | 0      | 7        | 179      | 459     | 644     |
+-----------------+--------+----------+----------+---------+---------+
| **TOTAL**       | 1,113  | 1,308    | 2,031    | 3,630   | 8,083   |
+-----------------+--------+----------+----------+---------+---------+
| **Marketing     |        |          |          |         |         |
| Year:           |        |          |          |         |         |
| 2006/2007**     |        |          |          |         |         |
|                 |        |          |          |         |         |
|                 |        |          |          |         |         |
+-----------------+--------+----------+----------+---------+---------+
| **Country**     | **J    | *        | *        | **      | **      |
|                 | ul-Sep | *Oct-Dec | *Jan-Mar | Apr-Jun | TOTAL** |
|                 | /06**  | /06**    | /07**    | /07**   |         |
+-----------------+--------+----------+----------+---------+---------+
| Japan           | 741    | 292      | 1,496    | 328     | 2,857   |
+-----------------+--------+----------+----------+---------+---------+
| Pakistan        | 118    | 174      | 598      | 571     | 1,460   |
+-----------------+--------+----------+----------+---------+---------+
| Taiwan          | 198    | 2,022    | 611      | 580     | 3,412   |
+-----------------+--------+----------+----------+---------+---------+
| Indonesia       | 82     | 898      | 1,766    | 1,762   | 4,508   |
+-----------------+--------+----------+----------+---------+---------+
| Other           | 1,936  | 917      | 445      | 2,980   | 6,278   |
+-----------------+--------+----------+----------+---------+---------+
| **TOTAL**       | 3,074  | 4,303    | 4,916    | 6,221   | 18,515  |
+-----------------+--------+----------+----------+---------+---------+
| **Marketing     |        |          |          |         |         |
| Year:           |        |          |          |         |         |
| 2007/2008**     |        |          |          |         |         |
|                 |        |          |          |         |         |
|                 |        |          |          |         |         |
+-----------------+--------+----------+----------+---------+---------+
| **Country**     | **J    | *        | *        | **      | **      |
|                 | ul-Sep | *Oct-Dec | *Jan-Mar | Apr-Jun | TOTAL** |
|                 | /07**  | /07**    | /08**    | /08**   |         |
+-----------------+--------+----------+----------+---------+---------+
| India           | 88     | 660      | 514      |         | 1,262   |
+-----------------+--------+----------+----------+---------+---------+
| Japan           | 515    | 1,977    | 294      |         | 2,786   |
+-----------------+--------+----------+----------+---------+---------+
| Thailand        | 506    | 0        | 201      |         | 707     |
+-----------------+--------+----------+----------+---------+---------+
| Vietnam         | 205    | 1,788    | 61       |         | 2,054   |
+-----------------+--------+----------+----------+---------+---------+
| Other           | 1,438  | 2,779    | 356      |         | 4,573   |
+-----------------+--------+----------+----------+---------+---------+
| **TOTAL**       | 2,753  | 7,204    | 1,425    |         | 11,382  |
+-----------------+--------+----------+----------+---------+---------+

Source: World Trade Atlas

### Table 7. China's Monthly Cotton Yarn and Thread Imports 

Unit: Metric Tons

  ------------- ------------------- ------------------- ------------------- ------------------- -------------------
  **Month**     **2004**            **2005**            **2006**            **2007**            **2008**

  January       57,570              51,642              62,896              75,289              59,448

  February      62,846              33,919              61,535              46,631              42,289

  March         65,562              68,635              88,313              88,089              73,161

  April         61,596              73,086              81,974              86,136               

  May           54,009              67,277              75,690              83,350               

  June          54,389              64,463              72,098              80,296               

  July          53,176              62,159              69,185              74,507               

  August        50,786              66,628              83,238              79,033               

  September     58,653              65,194              75,944              64,743               

  October       54,461              62,357              67,583              55,459               

  November      57,615              64,206              68,989              56,936               

  December      56,285              70,759              75,147              60,448               

  **TOTAL**     686,948             750,327             882,592             850,919              

  **Marketing   **Aug/04-Jul/05**   **Aug/05-Jul/06**   **Aug/06-Jul/07**   **Aug/07-Jul/08**   **Aug/08-Jul/09**
  Year**                                                                                        

  **TOTAL**     686,948             840,837             905,198                                  
  ------------- ------------------- ------------------- ------------------- ------------------- -------------------

Source: World Trade Atlas

### Table 8. China's Quarterly Cotton Yarn and Thread Imports by Country of Origin

Unit: Metric Tons

  --------------- --------- ---------- ----------- ---------- -------------
  **Calendar                                                  
  Year: 2006**                                                

  **Country**     **Jan -   **Apr      **Jul -     **Oct -    **TOTAL**
                  Mar**     -Jun**     Sep**       Dec**      

  China           75,267    95,017     89,374      81,781     341,440

  Pakistan        78,853    82,297     82,780      73,122     317,052

  Taiwan          15,405    12,545     15,616      19,265     62,830

  India           16,201    14,265     14,891      13,886     59,243

  Hong Kong       8,433     8,348      8,195       7,022      31,999

  Indonesia       7,339     6,176      6,596       6,092      26,202

  Thailand        4,440     4,178      3,555       3,838      16,010

  Korea, South    1,664     2,188      1,729       1,532      7,112

  Vietnam         1,017     817        1,172       1,282      4,288

  Japan           1,153     1,184      1,023       1,174      4,535

  Turkey          712       786        282         278        2,059

  Other           2,260     1,961      3,154       2,446      9,821

  **TOTAL**       212,744   229,763    228,367     211,718    882,592

  **Calendar                                                  
  Year: 2007**                                                

  **Country**     **Jan -   **Apr      **Jul -     **Oct -    **TOTAL**
                  Mar**     -Jun**     Sep**       Dec**      

  China           68,908    92,722     82,626      68,643     312,899

  Pakistan        80,977    93,901     86,320      61,145     322,343

  India           16,894    15,817     12,622      10,667     56,000

  Taiwan          18,222    17,354     12,794      10,769     59,139

  Hong Kong       7,478     8,573      6,821       6,310      29,181

  Indonesia       5,646     7,021      4,921       4,216      21,805

  Thailand        3,897     4,758      4,068       3,404      16,126

  Korea, South    2,768     4,206      3,484       2,500      12,958

  Other           5,219     5,431      4,627       5,191      20,469

  **TOTAL**       210,009   249,782    218,283     172,844    850,919

  **Calendar                                                  
  Year: 2008**                                                

  **Country**     **Jan -   **Apr      **Jul -     **Oct -    **TOTAL**
                  Mar**     -Jun**     Sep**       Dec**      

  China           68,617                                      68,617

  Pakistan        57,481                                      57,481

  India           12,770                                      12,770

  Taiwan          10,507                                      10,507

  Hong Kong       7,081                                       7,081

  Other           18,443                                      18,443

  **TOTAL**       174,898                                     174,898
  --------------- --------- ---------- ----------- ---------- -------------

Source: World Trade Atlas

### Table 9. China's Monthly Cotton Yarn & Thread Exports 

Unit: Metric Tons

  ------------- ------------------- ------------------- ------------------- ------------------- ------------
  **Month**     **2004**            **2005**            **2006**            **2007**            **2008**

  January       24,906              23,490              26,322              39,434              37,114

  February      32,647              19,406              33,121              27,261              28,436

  March         40,241              44,378              53,124              43,847              55,410

  April         34,155              45,339              48,898              48,235               

  May           33,594              43,642              46,251              49,864               

  June          34,402              38,775              44,601              47,980               

  July          31,143              34,481              44,321              47,382               

  August        30,152              36,940              50,092              50,663               

  September     34,799              37,634              45,748              45,760               

  October       31,469              32,429              43,383              39,810               

  November      33,372              34,724              42,682              39,890               

  December      30,811              32,096              41,114              38,956               

  **TOTAL**     391,691             423,334             519,657             519,081              

  **Marketing   **Aug/04-Jul/05**   **Aug/05-Jul/06**   **Aug/06-Jul/07**   **Aug/07-Jul/08**    
  Year**                                                                                        

  **TOTAL**     391,691             470,461             527,021                                  
  ------------- ------------------- ------------------- ------------------- ------------------- ------------

[]{dir="rtl"}

Source: World Trade Atlas

### Table 10. China's Quarterly Cotton Yarn and Threads Exports by Destination

Unit: Metric Tons

  --------------- ------------- ---------- ------------- ------------- ------------
  **Calendar                                                           
  Year:2006**                                                          

  **Country**     **Jan-Mar**   **Apr-     **Jul-Sep**   **Oct-Dec**   **TOTAL**
                                Jun**                                  

  Hong Kong       87,754        105,557    104,724       93,342        391,377

  Korea, South    8,343         8,871      8,860         8,196         34,270

  Bangladesh      2,601         2,534      4,410         2,636         12,181

  Japan           2,573         4,236      3,740         4,042         14,591

  Russia          280           903        3,200         3,041         7,424

  Italy           1,710         2,822      2,315         3,466         10,313

  Myanmar         1,506         1,437      2,126         2,296         7,365

  Indonesia       322           1,374      1,255         868           3,819

  Singapore       357           1,587      701           1,328         3,973

  Other           7,122         10,430     8,830         7,964         34,345

  **TOTAL**       112,567       139,750    140,161       127,179       519,657

  **Calendar                                                           
  Year:2007**                                                          

  **Country**     **Jan-Mar**   **Apr-     **Jul-Sep**   **Oct-Dec**   **TOTAL**
                                Jun**                                  

  Hong Kong       80,249        106,223    96,728        78,152        361,352

  Korea, South    7,072         8,777      8,643         6,629         31,121

  Bangladesh      2,076         4,322      4,545         3,175         14,117

  Italy           1,968         3,800      3,791         3,470         13,030

  Japan           3,426         3,490      3,557         3,462         13,935

  Myanmar         1,265         1,701      1,527         1,670         6,163

  Indonesia       1,041         2,307      1,251         1,309         5,908

  Russia          3,454         1,583      2,937         4,269         12,243

  Other           9,991         13,874     20,827        16,520        61,212

  **TOTAL**       110,543       146,078    143,805       118,655       519,081

  **Calendar                                                           
  Year:2008**                                                          

  **Country**     **Jan-Mar**   **Apr-     **Jul-Sep**   **Oct-Dec**   **TOTAL**
                                Jun**                                  

  Hong Kong       81,509                                               81,509

  Korea, South    10,348                                               10,348

  Bangladesh      5,437                                                5,437

  Italy           3,533                                                3,533

  Japan           3,143                                                3,143

  Other           16,992                                               16,992

  **TOTAL**       120,960                                              120,960
  --------------- ------------- ---------- ------------- ------------- ------------

[]{dir="rtl"}

Source: World Trade Atlas

### Table 11. China's Monthly Cotton Fabric Imports 

Unit: 1,000 Square Meters

  ------------- ------------------- ------------------- ------------------- ------------------- -------------------
  **Month**     **2004**            **2005**            **2006**            **2007**            2008

  January       73,589              90,434              78,984              101,379             82,988

  February      88,617              69,559              76,877              67,268              56,821

  March         110,499             116,262             111,700             107,980             81,949

  April         120,592             130,929             119,070             118,344              

  May           112,212             110,630             104,379             104,325              

  June          114,908             110,427             110,729             97,849               

  July          111,746             105,540             107,165             91,328               

  August        105,428             105,485             102,195             96,122               

  September     110,110             108,576             117,464             94,349               

  October       120,197             119,587             114,202             93,816               

  November      143,780             130,908             127,051             111,609              

  December      158,767             142,123             128,070             109,458              

  **TOTAL**     1,370,445           1,340,459           1,297,886           1,193,828            

  **Marketing   **Aug/04-Jul/05**   **Aug/05-Jul/06**   **Aug/06-Jul/07**   **Aug/07-Jul/08**   **Aug/08-Jul/09**
  Year**                                                                                        

  **TOTAL**     1,370,445           1,315,583           1,277,456                                
  ------------- ------------------- ------------------- ------------------- ------------------- -------------------

[]{dir="rtl"}

Source: World Trade Atlas

### Table 12. China's Quarterly Cotton Fabric Imports by Country of Origin

Unit: 1,000 Square Meters

  --------------- ------------- ------------- ------------- ------------- --------------
  **Calendar                                                              
  Year: 2006**                                                            

  **Country**     **Jan-Mar**   **Apr-Jun**   **Jul-Sep**   **Oct-Dec**   **TOTAL**

  China           102,895       139,621       143,097       167,846       553,459

  Hong Kong       70,072        96,808        81,841        95,070        343,790

  Pakistan        26,773        25,293        35,167        31,939        119,172

  Japan           34,244        31,812        25,128        31,856        123,040

  Taiwan          11,709        17,064        16,223        18,818        63,813

  Korea, South    10,144        10,822        12,868        10,685        44,519

  Indonesia       3,219         2,933         3,123         3,261         12,536

  Other           8,507         9,824         9,377         9,849         37,557

  **TOTAL**       267,561       334,178       326,824       369,323       1,297,886

  **Calendar                                                              
  Year: 2007**                                                            

  **Country**     **Jan-Mar**   **Apr-Jun**   **Jul-Sep**   **Oct-Dec**   **TOTAL**

  China           116,273       141,493       125,251       149,744       532,761

  Hong Kong       69,157        87,482        72,420        81,584        310,643

  Japan           30,483        27,380        20,493        26,332        104,689

  Pakistan        27,719        25,812        31,704        24,044        109,279

  Taiwan          12,647        17,013        12,670        13,897        56,227

  Korea, South    9,143         9,268         8,153         7,302         33,866

  Italy           1,708         2,823         2,688         2,862         10,080

  Indonesia       2,687         1,621         1,955         2,108         8,370

  Other           6,810         7,626         6,466         7,010         27,913

  **TOTAL**       276,627       320,519       281,800       314,883       1,193,828

  **Calendar                                                              
  Year: 2008**                                                            

  **Country**     **Jan-Mar**   **Apr-Jun**   **Jul-Sep**   **Oct-Dec**   **TOTAL**

  China           98,024                                                  98,024

  Hong Kong       54,873                                                  54,873

  Japan           25,673                                                  25,673

  Pakistan        18,294                                                  18,294

  Taiwan          10,034                                                  10,034

  Other           14,861                                                  14,861

  **TOTAL**       221,759                                                 221,759
  --------------- ------------- ------------- ------------- ------------- --------------

[]{dir="rtl"}

Source: World Trade Atlas

### Table 13. China's Monthly Cotton Fabric Exports 

Unit: 1,000 Square Meters

  ------------- ------------------- ------------------- ------------------- ------------------- -------------------
  **Month**     **2004**            **2005**            **2006**            **2007**            2008

  January       266,477             367,102             436,041             425,476             507,658

  February      215,131             284,965             273,382             411,280             370,832

  March         357,430             437,819             468,117             392,312             489,945

  April         362,893             417,040             448,958             496,096             

  May           335,913             385,868             434,668             439,481             

  June          351,726             414,540             444,517             424,101             

  July          332,007             398,196             428,935             439,774             

  August        347,696             419,847             485,664             474,342             

  September     399,186             437,275             485,395             507,569             

  October       396,667             424,741             471,032             490,385             

  November      443,212             441,006             513,640             546,508             

  December      465,363             447,263             522,728             513,499             

  **TOTAL**     4,273,700           4,875,663           5,413,079           5,560,822           

  **Marketing   **Aug/04-Jul/05**   **Aug/05-Jul/06**   **Aug/06-Jul/07**   **Aug/07-Jul/08**   **Aug/08-Jul/09**
  Year**                                                                                        

  **TOTAL**     4,273,700           5,104,752           5,506,981                               
  ------------- ------------------- ------------------- ------------------- ------------------- -------------------

[]{dir="rtl"}

Source: World Trade Atlas

### Table 14. China's Quarterly Cotton Fabric Exports by Destination

[]{dir="rtl"}**Unit: 1,000 Square Meters**

  ------------------ ------------- ------------- ------------- ------------- ------------
  **Calendar Year:                                                           
  2006**                                                                     

  **Country**        **Jan-Mar**   **Apr-Jun**   **Jul-Sep**   **Oct-Dec**   **TOTAL**

  Hong Kong          249,551       291,932       286,627       349,036       1,177,147

  Benin              73,162        112,604       142,182       163,529       491,476

  Bangladesh         79,339        97,816        96,453        114,576       388,184

  Korea, South       81,261        85,191        75,855        70,242        312,549

  Japan              58,598        59,811        66,107        69,609        254,124

  United States      44,629        45,851        47,769        53,641        191,890

  Vietnam            34,765        30,737        27,672        47,015        140,189

  Thailand           30,797        39,852        67,517        46,627        184,793

  Indonesia          34,259        39,092        53,282        46,456        173,089

  Ghana              28,564        41,376        43,266        41,796        155,001

  Togo               39,785        36,309        34,867        38,851        149,812

  Sri Lanka          27,318        21,575        27,139        35,467        111,498

  Gambia             19,642        29,794        30,782        31,707        111,925

  India              14,817        15,458        19,563        27,976        77,814

  Turkey             34,794        26,390        12,183        27,221        100,588

  Mexico             16,395        16,667        23,816        22,046        78,923

  Other              309,867       337,689       344,914       321,607       1,314,077

  **TOTAL**          1,177,541     1,328,143     1,399,994     1,507,401     5,413,079

  **Calendar Year:                                                           
  2007**                                                                     

  **Country**        **Jan-Mar**   **Apr-Jun**   **Jul-Sep**   **Oct-Dec**   **TOTAL**

  Hong Kong          239,613       262,343       258,446       307,260       1,067,662

  Benin              132,436       168,298       206,797       200,112       707,643

  Bangladesh         82,984        89,574        102,619       131,566       406,743

  Korea, South       74,906        82,307        73,327        69,612        300,152

  Japan              55,767        49,225        57,299        60,608        222,899

  Thailand           42,623        44,222        62,646        56,577        206,067

  Ghana              28,221        37,843        46,822        56,517        169,403

  Indonesia          38,519        49,157        53,607        56,050        197,333

  Vietnam            33,566        41,883        44,718        62,333        182,500

  United States      46,852        44,625        40,465        40,277        172,219

  Other              453,581       490,201       474,940       509,477       1,928,199

  **TOTAL**          1,229,069     1,359,678     1,421,684     1,550,391     5,560,822

  **Calendar Year:                                                           
  2007**                                                                     

  **Country**        **Jan-Mar**   **Apr-Jun**   **Jul-Sep**   **Oct-Dec**   **TOTAL**

  Hong Kong          208,902                                                 208,902

  Benin              184,087                                                 184,087

  Bangladesh         107,565                                                 107,565

  Korea, South       70,551                                                  70,551

  Japan              52,124                                                  52,124

  Thailand           51,173                                                  51,173

  Other              694,033                                                 694,033

  **TOTAL**          1,368,435                                               1,368,435
  ------------------ ------------- ------------- ------------- ------------- ------------

Source: World Trade Atlas

### Table 15. Cotton Planted Area and Production by Province

  ------------------- ----------- ------------ ------------ ------------- ------------
  **Planted Area                                                          
  (1,000 hectares)**                                                      

                      **2004**    **2005**     **2006\***   **2007\***    **2008\***

  Total               5,690       5,060        5,900        5,940         5,880

  Xinjiang            1,137       1,162        1,900        2,000         2,000

  Shandong            1,059       847          930          940           940

  Henan               952         782          801          700           690

  Hebei               669         573          623          638           615

  Anhui               399         376          375          335           350

  Jiangsu             409         368          355          345           300

  Hubei               408         390          382          418           420

  Hunan               167         133          136          156           160

  Gansu               68          64           77           79            79

  Jiangxi             62          81           88           82            88

  \* Data before 2006                                                     
  is based on NSB                                                         
  statistics. Data                                                        
  for 2006-2008 is                                                        
  Post\'s                                                                 
  estimate/forecast                                                       
  based on 2nd Ag                                                         
  Census and                                                              
  analysis.                                                               

  **Production (1,000                                                     
  MT)**                                                                   

                      **2004**    **2005**     **2006\***   **2007\***    **2008\***

  Total               6,320       5,700        7,600        7,800         7,700

  Xinjiang            1,783       1,957        2,700        3,000         2,900

  Shandong            1,098       846          1,023        1,100         1,140

  Henan               667         677          927          726           710

  Hebei               665         577          705          726           710

  Anhui               412         311          410          418           410

  Jiangsu             503         323          425          390           340

  Hubei               395         375          490          506           510

  Hunan               203         185          230          267           270

  Gansu               110         110          160          145           145

  Jiangxi             85          90           133          130           130

  \* Data before 2006                                                     
  is based on NSB                                                         
  statistics. Data                                                        
  for 2006-2008 is                                                        
  Post\'s                                                                 
  estimate/forecast                                                       
  based on 2nd Ag                                                         
  Census and                                                              
  analysis.                                                               
  ------------------- ----------- ------------ ------------ ------------- ------------

###  Table 16. Cotton Tariffs as of January 1, 2008

  ---------------------------- ------------- ------------ -------- --------- -------- --------- ---------
  **Description**              **HS Code**   **M.F.N.**   **CT**                      **Gen**   **VAT**
                                             (%)          (%)                         (%)       

                                                          **CA**   **CP**    **CC**             

  Cotton, not carded or combed 5201-0000     T4\*                                     T4        13

  Cotton, not carded or        5201-0000 10  1                                        125       13
  combed, including absorbent                                                                   
  cotton, in-quota                                                                              

  Cotton, not carded or        5201-0000 80  0                                        0         13
  combed, including absorbent                                                                   
  cotton,                                                                                       
  (custom,out-quota,interim)                                                                    

  Cotton, not carded or        5201-0000 90  40                                       125       13
  combed, including absorbent                                                                   
  cotton, out-quota                                                                             

  Cotton, carded or combed     5203-0000     T4                                       T4        17

  Cotton, carded or combed,    5203-0000 10  1                                        125       17
  in-quota                                                                                      

  Cotton, carded or combed,    5203-0000 90  40                                       125       17
  out-quota                                                                                     

  Cotton sewing thread,        5204-1100     5                               0        40        17
  containing                                                                                    

  85% or more by weight of                                                                       
  cotton                                                                                        

  Cotton yarn (other than      5205-1100     5            T3       3.5-4.5   0        40        17
  sewing                                                                                        

  thread), containing 85% or   to                                                                
  more                                                                                          

  by weight of cotton, not for 5205-4800                                                         
  retail sale                                                                                   

  Cotton yarn (other than      5207-1000     6            5        5         0        50        17
  sewing                                                                                        

  thread), containing 85% or   5207-9000     6            5        5.7       0        50        17
  more                                                                                          

  by weight of cotton,for                                                                        
  retail sale                                                                                   

  Woven fabrics of cotton,     5208-1100     10           5-T3     0         0        70        17

  containing 85% or more by    to                                                                
  weight of cotton, weighing                                                                    
  not more than 200 g/square                                                                    
  meter                                                                                         

                               5208-5990\*                                                       

                               \*Except:                                                         

  \"                           5208-2300     12           8        0         0        70        17
  ---------------------------- ------------- ------------ -------- --------- -------- --------- ---------

**Table 16. Cotton Tariffs as of January 1, 2008 (continued)**

+--------------------+----------+------+----+------+----+------+----+
| **Description**    | **HS     | **   | ** |      |    | **G  | *  |
|                    | Code**   | M.F. | CT |      |    | en** | *V |
|                    |          | N.** | ** |      |    |      | AT |
|                    |          | (%)  | (  |      |    | (%)  | ** |
|                    |          |      | %) |      |    |      |    |
+--------------------+----------+------+----+------+----+------+----+
|                    |          |      | CA | CP   | CC |      |    |
+--------------------+----------+------+----+------+----+------+----+
| Woven fabrics of   | 5        | 10   |    | 0    | 0  | 70   | 17 |
| cotton, containing | 209-1100 |      |    |      |    |      |    |
| 85% or more by     |          |      |    |      |    |      |    |
+--------------------+----------+------+----+------+----+------+----+
| weight of cotton,  | 5        | 10   | T3 | 0    | 0  | 70   | 17 |
| weighing more      | 209-1200 |      |    |      |    |      |    |
+--------------------+----------+------+----+------+----+------+----+
| than 200 g/square  | 5        | 10   | T3 | 0    | 0  | 70   | 17 |
| meter              | 209-1900 |      |    |      |    |      |    |
+--------------------+----------+------+----+------+----+------+----+
|                    | 5        | 12   | T3 | 0    | 0  | 70   | 17 |
|                    | 209-2100 |      |    |      |    |      |    |
+--------------------+----------+------+----+------+----+------+----+
| \"                 | 5        | 12   | 8  | 0    | 0  | 70   | 17 |
|                    | 209-2200 |      |    |      |    |      |    |
+--------------------+----------+------+----+------+----+------+----+
|                    | 5        | 12   | T3 | 0    | 0  | 70   | 17 |
|                    | 209-2900 |      |    |      |    |      |    |
+--------------------+----------+------+----+------+----+------+----+
|                    | 5        | 10   | T3 | 0    | 0  | 70   | 17 |
|                    | 209-3100 |      |    |      |    |      |    |
+--------------------+----------+------+----+------+----+------+----+
|                    | 5        | 10   | T3 | 0    | 0  | 70   | 17 |
|                    | 209-3200 |      |    |      |    |      |    |
+--------------------+----------+------+----+------+----+------+----+
|                    | 5        | 10   | T3 | 0    | 0  | 70   | 17 |
|                    | 209-3900 |      |    |      |    |      |    |
+--------------------+----------+------+----+------+----+------+----+
|                    | 5        | 10   | T3 | 0    | 0  | 70   | 17 |
|                    | 209-4100 |      |    |      |    |      |    |
+--------------------+----------+------+----+------+----+------+----+
| \"                 | 5        | 10   | T3 | 0    | 0  | 70   | 17 |
|                    | 209-4200 |      |    |      |    |      |    |
+--------------------+----------+------+----+------+----+------+----+
|                    | 5        | 10   | 5  | 0    | 0  | 70   | 17 |
|                    | 209-4300 |      |    |      |    |      |    |
+--------------------+----------+------+----+------+----+------+----+
|                    | 5        | 10   | T3 | 0    | 0  | 70   | 17 |
|                    | 209-4900 |      |    |      |    |      |    |
+--------------------+----------+------+----+------+----+------+----+
|                    | 5        | 10   | 8  | 0    | 0  | 70   | 17 |
|                    | 209-5100 |      |    |      |    |      |    |
+--------------------+----------+------+----+------+----+------+----+
|                    | 5        | 10   | 5  | 0    | 0  | 70   | 17 |
|                    | 209-5200 |      |    |      |    |      |    |
+--------------------+----------+------+----+------+----+------+----+
|                    | 5        | 10   | 5  | 0    | 0  | 70   | 17 |
|                    | 209-5900 |      |    |      |    |      |    |
+--------------------+----------+------+----+------+----+------+----+
| Note: CA:          |          |      |    |      |    |      |    |
| Association of     |          |      |    |      |    |      |    |
| Southeast Asian    |          |      |    |      |    |      |    |
| Nations; CP:       |          |      |    |      |    |      |    |
| China-Pakistan;    |          |      |    |      |    |      |    |
| CC: China-Chile    |          |      |    |      |    |      |    |
|                    |          |      |    |      |    |      |    |
| T4: Subject to     |          |      |    |      |    |      |    |
| variable duty rate |          |      |    |      |    |      |    |
+--------------------+----------+------+----+------+----+------+----+

Source: PRC Customs Import & Export Tariff, 2008

[]{dir="rtl"}

### Table 17. Cotton Tariff Rate Quotas

[]{dir="rtl"}

+---------+----------+------------+------------------+-----------------+
| Desc    | HS Code  | Initial    | Final Quota and  | Implementation  |
| ription |          | Quota and  | Tariff Rate      | of Final Quota  |
|         |          | Tariff     |                  |                 |
|         |          | Rate       |                  |                 |
+---------+----------+------------+------------------+-----------------+
| Cotton  |          | 780,750 MT | 894,000 MT       | 2004            |
+---------+----------+------------+------------------+-----------------+
|         | 5201 -   | 1%         | 1%               |                 |
|         | 0000     |            |                  |                 |
+---------+----------+------------+------------------+-----------------+
|         | 5203 -   | 1%         | 1%               |                 |
|         | 0000     |            |                  |                 |
+---------+----------+------------+------------------+-----------------+
|         |          |            |                  |                 |
|         |          |            |                  |                 |
| Other   |          |            |                  |                 |
| terms   |          |            |                  |                 |
| and     |          |            |                  |                 |
| cond    |          |            |                  |                 |
| itions: |          |            |                  |                 |
|         |          |            |                  |                 |
| 1\) STE |          |            |                  |                 |
| share = |          |            |                  |                 |
| 33%     |          |            |                  |                 |
| (See    |          |            |                  |                 |
| Note)   |          |            |                  |                 |
|         |          |            |                  |                 |
| 2\)     |          |            |                  |                 |
| Staging |          |            |                  |                 |
| of TRQ  |          |            |                  |                 |
| for     |          |            |                  |                 |
| cotton: |          |            |                  |                 |
|         |          |            |                  |                 |
| Year    |          |            |                  |                 |
| TRQ     |          |            |                  |                 |
| qu      |          |            |                  |                 |
| antity: |          |            |                  |                 |
|         |          |            |                  |                 |
| 2002 -  |          |            |                  |                 |
| 818,500 |          |            |                  |                 |
| MT      |          |            |                  |                 |
|         |          |            |                  |                 |
| 2003 -  |          |            |                  |                 |
| 856,250 |          |            |                  |                 |
| MT      |          |            |                  |                 |
|         |          |            |                  |                 |
| 2004 -  |          |            |                  |                 |
| 894,000 |          |            |                  |                 |
| MT      |          |            |                  |                 |
|         |          |            |                  |                 |
| 2005 -  |          |            |                  |                 |
| 894,000 |          |            |                  |                 |
| MT      |          |            |                  |                 |
| (China  |          |            |                  |                 |
| added   |          |            |                  |                 |
| 1.4 MMT |          |            |                  |                 |
| TRQ for |          |            |                  |                 |
| 2005)   |          |            |                  |                 |
|         |          |            |                  |                 |
| 2006 -  |          |            |                  |                 |
| 894,000 |          |            |                  |                 |
| MT      |          |            |                  |                 |
| (China  |          |            |                  |                 |
| added   |          |            |                  |                 |
| 2.7 MMT |          |            |                  |                 |
| TRQ in  |          |            |                  |                 |
| 2006,   |          |            |                  |                 |
| subject |          |            |                  |                 |
| to      |          |            |                  |                 |
| v       |          |            |                  |                 |
| ariable |          |            |                  |                 |
| import  |          |            |                  |                 |
| duty)   |          |            |                  |                 |
|         |          |            |                  |                 |
| 2007 -  |          |            |                  |                 |
| 894,000 |          |            |                  |                 |
| MT      |          |            |                  |                 |
| (China  |          |            |                  |                 |
| added   |          |            |                  |                 |
| 2.6 MMT |          |            |                  |                 |
| TRQ for |          |            |                  |                 |
| 2007,   |          |            |                  |                 |
| subject |          |            |                  |                 |
| to      |          |            |                  |                 |
| v       |          |            |                  |                 |
| ariable |          |            |                  |                 |
| import  |          |            |                  |                 |
| duty)   |          |            |                  |                 |
|         |          |            |                  |                 |
|         |          |            |                  |                 |
|         |          |            |                  |                 |
| 2008 -  |          |            |                  |                 |
| 894,000 |          |            |                  |                 |
| MT      |          |            |                  |                 |
| (       |          |            |                  |                 |
| China's |          |            |                  |                 |
| WTO     |          |            |                  |                 |
| com     |          |            |                  |                 |
| mitment |          |            |                  |                 |
| does    |          |            |                  |                 |
| NOT     |          |            |                  |                 |
| mandate |          |            |                  |                 |
| a TRQ   |          |            |                  |                 |
| for     |          |            |                  |                 |
| CY05 to |          |            |                  |                 |
| CY07,   |          |            |                  |                 |
| but     |          |            |                  |                 |
| China   |          |            |                  |                 |
| mai     |          |            |                  |                 |
| ntained |          |            |                  |                 |
| an      |          |            |                  |                 |
| id      |          |            |                  |                 |
| entical |          |            |                  |                 |
| q       |          |            |                  |                 |
| uantity |          |            |                  |                 |
| of TRQ  |          |            |                  |                 |
| as      |          |            |                  |                 |
| CY04.   |          |            |                  |                 |
| In      |          |            |                  |                 |
| a       |          |            |                  |                 |
| ddition |          |            |                  |                 |
| to      |          |            |                  |                 |
| those   |          |            |                  |                 |
| v       |          |            |                  |                 |
| olumes, |          |            |                  |                 |
| based   |          |            |                  |                 |
| on      |          |            |                  |                 |
| market  |          |            |                  |                 |
| demand, |          |            |                  |                 |
| China   |          |            |                  |                 |
| adds    |          |            |                  |                 |
| TRQs    |          |            |                  |                 |
| yearly. |          |            |                  |                 |
| The     |          |            |                  |                 |
| added   |          |            |                  |                 |
| TRQs    |          |            |                  |                 |
| are     |          |            |                  |                 |
| subject |          |            |                  |                 |
| to a    |          |            |                  |                 |
| v       |          |            |                  |                 |
| ariable |          |            |                  |                 |
| import  |          |            |                  |                 |
| duty)   |          |            |                  |                 |
|         |          |            |                  |                 |
|         |          |            |                  |                 |
|         |          |            |                  |                 |
|         |          |            |                  |                 |
+---------+----------+------------+------------------+-----------------+

[]{dir="rtl"}