NDRC expects domestic and international cotton price gap to narrow to a reasonable range
On the 22nd, the National Development and Reform Commission (NDRC) held a press conference on the pilot reform of the cotton target price and market regulation. Wen Bugao, the host of the press conference, stated that since China implemented the pilot reform of the cotton target price and the pilot market regulation, the price gaps in the domestic and international cotton and soybean markets have been gradually narrowing, and corporate confidence and market vitality have also been gradually strengthening. Looking at the domestic and international cotton price gap for the new year, it is expected to narrow to a reasonable range, which will help curb substitution by chemical fibers and reduce imports of cotton yarn. Domestic cotton demand is expected to stabilize and rebound.
He stated that in the first 8 months of this year, China's CPI rose 2.2% year-on-year, while the PPI fell 1.2% year-on-year. The monthly CPI increase was between 1.8% and 2.5%, and the overall price level remained basically stable. In response to this situation, the NDRC, in accordance with the arrangements of the Party Central Committee and the State Council, fully utilized the favorable opportunity of a low price level, adopted comprehensive regulation, and combined “delegating”, “managing”, “building”, and “reforming”, intensively introducing dozens of major price policies and reform measures, which achieved positive results. One of the major measures was, in accordance with the requirements of the 2014 Central Document No. 1 and the arrangements of the State Council, launching the pilot work on target price reform for cotton in Xinjiang and soybeans in Northeast China and Inner Mongolia.
Wen Bugao introduced that the various policies have now been clarified, and the pilot reform work is progressing smoothly. It mainly includes the following four aspects.
First, the target price levels and the reform plan were issued. In early April and around mid-to-late May respectively, the 2014 target prices for cotton and soybeans were announced. The target price levels were 19,800 yuan per ton and 4,800 yuan per ton, respectively. In July, the “Cotton Target Price Reform Pilot Plan” was also issued, providing guidance for the pilot areas to formulate specific work implementation plans.
Second, a market price monitoring plan was formulated. In July, our commission, together with relevant departments, studied and formulated the “Implementation Plan for Market Price Monitoring of Cotton in Xinjiang”, clarifying the price monitoring indicators and specific division of tasks. Starting from September 1, the market price monitoring work for cotton in Xinjiang has been officially launched.
Third, Xinjiang's specific implementation plan was approved. With the approval of the State Council, last week our commission approved the “Implementation Plan for the Pilot Work of Cotton Target Price Reform” of the Xinjiang Autonomous Region and the Xinjiang Production and Construction Corps. The Xinjiang Autonomous Region and the Corps also determined different subsidy distribution methods based on their own actual conditions. The specific contents of the plan will be announced to the public as soon as possible by the Xinjiang Autonomous Region and the Xinjiang Production and Construction Corps.
Fourth, regulatory measures for the cotton market in the new year were studied and proposed. Implementing the target price system is a major institutional innovation for improving China's agricultural product price and market regulation mechanisms. Since the launch of the pilot, the cotton planting area in Xinjiang has been relatively stable, the price gaps in the domestic and international cotton and soybean markets have been gradually narrowing, and corporate confidence and market vitality have also been gradually strengthening. Looking at the domestic and international cotton price gap for the new year, it is expected to narrow to a reasonable range, which will help curb substitution by chemical fibers and reduce imports of cotton yarn. Domestic cotton demand is expected to stabilize and rebound. Next, our commission will, together with relevant departments, promptly summarize the experience of the pilot reform, improve relevant policy measures, and comprehensively adopt measures such as import and export and reserve regulation to do a good job in market regulation, maintain smooth market operation, and create a favorable market environment for the pilot reform of the target price.