No Soft Landing: As China opens its markets, US subsidies are making life hard for cotton farmers

Overview

China is the world’s biggest producer and consumer of cotton. The development of the textile industry since the 1990s has increased the demand for cotton and benefited millions of Chinese farmers. However, China’s dismantling of state-owned enterprises and liberalisation of its cotton sector as part of its WTO accession commitments have increasingly exposed Chinese farmers to world market forces. Meanwhile, as the USA continues to insulate its own cotton sector in violation of WTO rules, the volume of US cotton imported by China increased by 21 times between 2001 and 2004. The influx of subsidised, low-priced US cotton has contributed to falling domestic cotton prices and the crowding out of local production.