Effects of market price, cultivating area and price regulation on cotton production in China

摘要

This study examines the quantitative effects of market price in cotton producing areas of China. It also analyzes the qualitative effects of price regulation on cotton production. Secondary time series data were collected from National Bureau of Statistics in China, between 1990 and 2013. Calculation of the growth rate of cotton in production was done using linear trend model and multi-regression model to analyze the correlations between production, area and market price. The results of regression between the dependent variable (cotton production) and independent variables such as the previous year’s area, current year’s area and the previous year’s market price showed that the R-Square and adjusted R-Square values are 0.89 and 0.87, respectively, and the t-statistics of all independent variables rejected null hypothesis of no correlation at the 1% significant level. This infers that the market price and cultivating area of cotton crop has a highly significant relationship with the production. What’s more, the coefficients of current year’s area and previous year’s market price are higher than 0, denoting a positive impact on production. However, coefficient of previous year’s area is smaller than 0, implicating a negative influence on cotton production. In addition, the value of dry weight calculated is 1.94, which means no series auto-correlation exists. Despite this, it can be concluded from the regression results is that cultivating area and market price have time lag impacts on cotton production. Furthermore, price regulation has indirect positive impacts on cotton production.