China will no longer support a strategic reserve for cotton. This means cotton production and cotton-related industries will no longer be shielded from the forces of the free market. Chinese domestic textile mills can source their raw cotton from the free market.
The impact will be to allow both cotton plantings and production to decline, allowing other countries to seed more land area to cotton. The US will be firmly entrenched in the foreseeable future with 11.5 million acres under cotton. Yet cotton will still be a commodity, and thus will find favor mostly in areas of low cost production regions like Vietnam, Cambodia, Laos, Bangladesh and Myanmar.
In China other industries have surpassed the textile industry. The textile mills have become outdated and are too inefficient to operate. Just as it occurred in Europe of the 1800s, Japan and South Korea in the late 1900s and the US in the early 2000s, now the textile industry is exiting Chinese shores. Right now China has the world’s largest textile industry but India may soon claim that position.
