On the morning of July 24, the Chinese Ministry of Foreign Affairs issued a document notifying the U.S. Embassy in China that China has decided to revoke the establishment and operation license of the U.S. Consulate General in Chengdu and has made specific requirements for the consulate general to cease all operations and activities. This move has aroused great concern in the market. This time China intends to respond to the United States’ sudden unilateral request on July 21 to close the Consulate General in Houston. China is the world’s largest cotton consumer and the United States is the largest cotton exporter. The two countries are closely related in cotton, textile and apparel trade. The market is worried. Industry experts have previously stated that China’s textile and apparel market may evaporate by 400 billion in 2020 due to adverse factors such as the COVID-19 epidemic. If Sino-US relations become tense again, will it trigger a new round of market turmoil.
Since the escalation of Sino-US trade friction in 2018, China has retaliated by increasing tariffs on cotton imports from the United States by 25%. US cotton imports have stagnated for a time, causing China’s cotton imports in 2019 to The proportion of US cotton fell from the previous first place to third place. Then, with repeated consultations between the two countries, China and the United States officially signed the Sino-US trade agreement on January 15, 2020. Since then, the trade dispute between the two countries has gradually eased. In the first half of the year, China’s contract signings with US cotton increased significantly, which played a strong supporting role in US cotton prices. Various parts of the world are constantly affected by the epidemic, and the textile and apparel industries in various countries have suffered huge impacts to varying degrees. A large number of stores of world-renowned retail brands such as Zara and H&M have been permanently closed, which has cast a shadow on the textile and apparel industry, and the confidence of the industry has also suffered. Heavy damage.
From January to June 2020, my country’s cumulative exports of textiles were US$74.103 billion, a year-on-year increase of 27.8%; cumulative exports of clothing were US$51.084 billion, a year-on-year decrease of 19.4%. Thanks to the significant increase in my country’s exports of medical textiles, clothing exports have performed poorly. Therefore, some foreign trade companies have also promptly explored new models and tried to switch from foreign trade to domestic sales to win as many orders as possible. Of course, this is also related to changes in the domestic market. Since the domestic epidemic was quickly brought under control in the first half of the year, the upstream and downstream markets have recovered to varying degrees. Both spinning and weaving companies have focused on the domestic market. According to recent customs data, my country’s cotton imports in June 2020 were 90,000 tons, an increase of 29% from the previous month and a decrease of 44% from the same period last year. In 2020, a total of 890,000 tons of cotton were imported, a year-on-year decrease of 25%. In 2019/20, a total of 1.3 million tons of cotton were imported, a year-on-year decrease of 27%. It can be seen that as the domestic cotton market is repaired, import volume gradually rebounds, but the total volume during the year is still low.
To sum up, the escalation of the diplomatic confrontation between China and the United States may once again trigger concerns in the financial market. Cotton, as a variety with strong financial attributes among bulk agricultural commodities, will not be immune. Regardless of the quantity of US cotton signed in the later period or the exclusion of tariffs on related goods by both parties, they all deserve close attention. </p
