Chinese cotton imports slid 44.9 per cent year-on-year in January. Slack global market conditions have hit China’s labor-intensive industries, especially garment and textile production, as well as shoes, toys and furniture. Exports of garment and yarn products fell 12.4 and 7.6 per cent respectively. Shoe exports declined 10.8 per cent.

Orders for garment and yarn products from developed markets have been dwindling since mid 2011. Though many Chinese manufacturers are now less dependent on developed markets, exports are still the mainstay of their businesses, which are dominated by original equipment manufacturing.

Even though the US economy stabilized, it could not offset lethargic demand from the European Union, Japan and many emerging economies. Another factor behind falling cotton imports is the country’s huge inventories. Fast growing domestic cotton output and the policy of paying a floor price for certain agricultural products have forced the government to spend more on storing domestic cotton.

To reduce the burden, government has pushed domestic textile enterprises to use more homegrown cotton in recent years. Growing uncertainties in the world market will prompt garment and yarn producers in China to move up the value chain. They will have to offer high end products and devise new strategies to expand their markets, and small, obsolete factories will be weeded out through competition over the next five years.