International cotton trade is becoming more complicated for China with the US keeping a close watch on its exports. The CCF Group reports, these days China’s cotton exports are being closely monitored by the US for their purchase invoice, certificate of origin and declaration of noncompulsory labor importers. The value of China’s cotton textiles and apparels exports to the US was already declining before COVID-19. The pandemic in 2020 soured this value further. Now, the US’ sanctions against Xinjiang are expected to compound the crisis.
US’ moves to other sourcing destinations
With imports worth $45-47 billion, the US has been one of the major importers of Chinese cotton textiles and apparels every year. In 2020 however, the country drastically declined its cotton imports from China and moved to other sourcing destinations such as India, ASEAN, Pakistan and Bangladesh. Currently, exports from these countries account for over 80 per cent of US cotton textile and apparel imports. The US has also banned import of cotton fabrics containing Xinjiang cotton. This may not only affect China’s exports but also those of Bangladesh and ASEAN countries such as Vietnam, Cambodia and Indonesia as these do not have a complete textile and apparel industry chain. They are highly dependent on intermediate links and feedstock imports, of which China is a major source.
Exports to RCEP members grow
In the first quarter of this financial year, China’s trade with other 14 RCEP member countries grew by 22.9 per cent year-on-year to 2.67 trillion yuan. It accounted for 31.5 per cent of its total foreign trade value. China’s exports during the quarter grew by 27.5 per cent to 1.25 trillion yuan while imports grew 19 per cent to 1.42 trillion yuan. Its trade with ASEAN, Japan and South Korea increased by 26.1 per cent, 20.8 per cent and 19.5 per cent respectively. Of these, export of textiles and apparel increased by 27.9 per cent while those of mechanical and electrical products grew by 28.7 per cent to 659.85 billion yuan.