After two decades of rapid development, China has emerged as the world’s largest producer of chemical fiber. Consumption of chemical fiber has also grown rapidly, finally overtaking cotton in 1997. The share of cotton in total fiber consumption has declined from 83 percent in 1982 to about 40 percent in recent years. As a result, cotton consumption increased only slightly, while total fiber consumption increased more than 120 percent in the last two decades. With increased income and improved market accessibility, China has changed from a net cotton exporter to a net cotton importer since 1989. As China moves closer to joining the WTO, it is important to gain a better understanding of the competition between the two main inputs into China’s textile industry. This paper examines China’s chemical fiber and cotton production and availability, identifies the factors responsible for the decline in the cotton share, and quantifies the impact of these factors in order to provide a better understanding of China’s current cotton and man-made fiber consumption and the likely future trends of cotton consumption and trade.

relatively labor-intensive crop. More non-farm job opportunities in East China are encouraging the cultivation of less labor-intensive crops. In addition, there are have been significant bollworm problems in the North China Plain, making cotton production less profitable relative to substitute crops (though preliminary reports indicate the introduction of BT cotton in Henan and Shandong provinces is spurring a recovery in cotton area in the North China Plain).

China’s government controls cotton imports through a strict quota system. The system limits both the volume and the number of importers allowed to import raw cotton. Chemical fibers, however, have no such restrictions. Although there are higher tariffs for chemical fibers than cotton, chemical fiber imports for processing and re-export are duty-free. The government implemented a round of tariff cuts on all chemical fiber materials and products in 1997, then making further cuts for textiles in general in 1999. China has become a major importer of chemical fiber and the raw materials for domestic chemical fiber production. Imports increased by 18 percent annually between 1990 and 1997. Though affected by the Asian crisis, China still imported 1.73 MMT in 1998. China accounts for 17 percent of world chemical fiber imports.