China’s Economic Situation Worries US Cotton Stakeholders
China’s economic situation is a problem, with growth rates less than 5 percent, as against double digit growth rates in the pre-pandemic era, predominantly due to its manufacturing and exporting prowess.
“The Chinese economic situation is not being helped by the housing crisis and high unemployment rates,” was one of the conclusions at a meeting of cotton industry stakeholders held in Lubbock, USA.
“One of the centre stages of the discussions was that the US cotton crop will be less this year, thanks to dry and prolonged hot summer in the high plains of Texas and the economic situation of China,” said Dr Seshadri Ramkumar, Professor at Texas Tech University.
“As China’s economy suffers, it affects the regional economy as well. Foreign investors are not investing in China resulting in job losses and hence affecting middle class population,” Daniel Lee, Export Sales Manager at HMM American Shipping Agency said.
Lee further stated that increase in labour costs, forced labour issues and geopolitical tensions between China and other countries are forcing foreign investments to other countries such as Indonesia, Vietnam and Cambodia.
“So, now China is looking for domestic investments and domestic market growth to bolster its economy,” Lee opined.
“There are opportunities for India to boost its manufacturing sector. India should focus on value-added products and enhance its product basket to be a viable alternative to China,” Dr Seshadri added.
“Government of India and the Indian textile industry are aware of this necessity and efforts are underway to enhance its textile sector by focusing on post spinning sector,” he observed.
A quick survey of the attendees at the meeting indicated that textile and clothing imports into the US will pick up during the second quarter of 2024 indicating a slow demand in the next few months.
“United States’ cotton industry is competing against countries like Brazil, which sells cotton at 3-4 cents less and we have to be competitive,” Beau Stephenson, President of Texas Cotton Association also said.
There was a sentiment among the participants that in the 2023-24 cotton marketing season, United States will export less than 11 million cotton bales (each of 480 lbs).
“In this current situation, effective communication with our partners is needed to plan for the season ahead,” stated Kandice Poteet, Executive Vice President of Texas Cotton Association.
A representative of cotton truckers attending the meeting agreed that partnerships and constant communication with stakeholders are important to move cotton forward.
