China (Mainland) increases import quotas

摘要

At the start of January 2003 the State Development Planning Commission in China (Mainland) issued import quotas for 2003 for a range of commodities, including cotton. The cotton import quota was issued for the full quantity stipulated by China (Mainland)'s WTO obligations, or for 856,250 tons, of which 500,000 tons were allocated to processors, or textile exporting companies and the rest for mills selling in the domestic market. In an effort to streamline foreign trade, the government started in January 2003 to accept online applications for import and export licenses. The required registered capital for Chinese companies to gain import and export rights was lowered to 3 million Yuan (or 360,000 dollar). Joint ventures and cooperatives in which foreign investors are a minority gained access to full trading rights. During the first three months of 2003, there was a relatively slow use of cotton import quotas and imports totaled just 150,000 tons. However, imports gained momentum starting in April2003, once most of the domestic crop had been committed and fiber shortages led domestic prices to rise. China (Mainland) imported 420,000 tons during April-July 2003, bringing total imports for January-July 2003 to 570,000 tons and leaving only 285,000tons of remaining quotas for the rest of the year. By end-September, when estimates of production in China (Mainland) were drastically reduced and large imports of more than 1.2 million tons were projected, only about 200,000 tons of the 2003 quota remained unused. The sudden realization of an acute shortage of domestic cotton caused domestic prices in China (Mainland) to rise above 90 cents per pound for grade 328 and led to a rush of import purchases by Chinese enterprises during September-November 2003 driving international prices higher.