Cotton is king as China picks up foreign trade

The big story in Chinese-American trade this year is cotton. As part of its program to improve living standards at home and to push textile exports abroad, China has bought 2.2 million bales of American cotton during the current crop year, for delivery by August. At a price of more than $ 300 per bale, the purchase is worth nearly $700 million. China has thus become far and away the United States' best cotton customer, outstripping such countries as Japan and South Korea, which normally buy about a million bales each.

Last year Peking imported 700,000 bales of cotton from the United States. Toward the end of the year it suddenly stepped up the pace, contracting in three stages to import a total of 2.2 million bales by August, cash on the barrel.

American trade sources are pleased, but do not expect such a high level of purchases to continue. China ranks with the Soviet union and the US as among the world's three largest cotton producers. Last year it produced 2,218,500 tons, or approximately 10.2 million bales, compared with 14 million bales in the US.

China produces most varieties, including extra-long staple in the Xinjiang (Sinkiang) Desert. Its total cotton imports are 3 million to 3.4 million bales a year. The 2.2 million from the US this year will make up about two-thirds of this. The purchases are spread throughout the developing world, from Egypt, Turkey, and Syria to East Africa and Latin America.

Experts do not think China will rely so much on the US as it continues to cultivate third-world sources. Then why such high purchases this year? Two main reasons are suggested: a continuing need to increase living standards at home and to push textile exports abroad.

Cotton cloth is still rationed in China. Each person is entitled to 6 meters (20 feet) a year. But with synthetic fibers and blended cloth increasing, most persons in urban areas seem to find the ration adequate.

This year there has been a concerted effort to increase the quality and the variety of clothing in the stores. It is part of the campaign to keep inflation down by increasing the supply of consumer goods and thus sopping up some of the extra cash generated by bonuses and incentive payments.

As for exports, textiles are China's main manufactured item. The Chinese see an increase in such exports as a quick way to bring sorely needed foreign exchange.

The cotton being imported from the US is mainly of two varieties -- short-staple (inch-long) from Texas and long, strong fibers from California. Presumably it is to be blended with Chinese cotton and with Synthetics.

Cotton is now the largest agricultural item, in terms of value, that China buys from the US. The total last year came to $800 million (out of $1.7 billion total US exports to China). With cotton playing such an important role this year, agricultural exports to China will easily top the $1 billion level.