Not content with rushing through the unjust ‘executions’ of ethnic minorities, people with disabilities – and women – the out-going President Trump has not only been ‘impeached’ for a second record time (for ordering the violent other throw of the US system), but he is still dictating to the Western world how to racially interpret China and discriminatively ‘relate’ to China’s lawful trading actions. According to general public opinion in the West – only far-right bigots are still following his every word! This cannot be true with regard to Trump’s anti-China racism – because as soon as it is expressed – like an edict issued by the emperors of old – Trump’s dictates are immediately enacted throughout all of the capitalist countries of the West, regardless of their inherent or explicit illegality. This is how the collective ‘White’ bourgeoisie of the West supports its individual chapters residing within each of the Nation States it controls. This is truly a demonstration of the ‘dictatorship of the bourgeoisie’! Trump has made a terrible mistake of judgement regarding the cotton industry. His actions are causing the cotton industry to shift its epicentre to Southeast Asia and to be led by China! In this way, China can ‘freeze-out’ the US market which will cause unemployment and unnecessary suffering to the US cotton workers!
The US government has been speculating on Xinjiang-related issues for a long time. In September this year, it was reported that Trump plans to issue a “Xinjiang cotton ban”. Now he has used the excuse of “forced labour” to increase his suppression of the Xinjiang cotton industry. On December 3, Foreign Ministry Spokesperson Hua Chunying (华春莹) hosted a regular press conference. A reporter asked questions regarding China’s position about the United States’ ban on the import of Xinjiang cotton and cotton products on the grounds of “forced labour”.
Hua Chunying said that China has already stated its solemn position on relevant the issues. Some US politicians have conspired to fabricated so-called “forced labour” false news issue – with the purpose of restricting and suppressing relevant parties and enterprises in China – with the aim of preventing China’s development. The actions of the United States violate international trade rules and market economy principles, undermine the global industrial chain and supply chain, and harm the interests of enterprises and consumers in various countries, including the United States. It is a typical act that harms others and disadvantages oneself. On December 2, local time, the US Customs and Border Protection (CBP) announced that it had issued a “ban” against the Xinjiang Production and Construction Corps, the Xinjiang cotton production giant, which accounts for one-third of China’s output. This ban includes imported cotton and cotton fabrics. According to Reuters analysis, this move is one of the measures taken by the Trump administration to strengthen its tough stance on China in the last few weeks of its tenure, and it will make it more difficult for President-elect Biden to ease Sino-US relations.
It is understood that the cotton output of Xinjiang Production and Construction Corps accounts for one-third of China’s total cotton output, and it has been deeply integrated into the supply chain throughout China and the world. Some textile industry experts said that it is almost impossible to import textiles from China without the participation of the Xinjiang Production and Construction Corps. How will the ban affect the cotton market? BOCI Futures analyst Xiong Tao (熊涛) told the Futures Daily reporter that there had been threats before about a possible US Xinjiang cotton ban but was shelved due to Covid19 issues causing disruption. At present, the impact on cotton prices is not as great as it could be – as the market has adapted to the threat in the short-term. However, in the medium and long term, this move will accelerate the transfer of the textile industry to Southeast Asia, and China will increase foreign cotton procurement. “In the future, China is likely to reduce U.S. cotton imports and apply its own trading countermeasures. US cotton is currently under great pressure, and cotton and cotton yarn outside the United States will have a premium. Xinjiang cotton purchase and processing this year is coming to an end, and the purchase cost of an early harvest of seed cotton is high. Domestic and foreign consumption will quickly recover, due to the good and timely management of the Xinjiang rotation required in planting and harvesting, etc. Barring unforeseen circumstances, there should be little disruption in the Xinjiang cotton industry.
Wu Xinyang (吴新扬), an analyst at CITIC Construction Investment Futures, also believes that this news has already received market attention in mid-September. The sanctions at that time triggered a decline in cotton rotation. Then came news that the sanctions were shelved and cotton prices rebounded. Judging from the feedback from the middle and lower reaches of the cotton spinning industry, the market has intensified this concern again. Coupled with the increase in the cost-effectiveness of imported yarns, the demand for imported yarns has also expanded recently, squeezing the market for Xinjiang cotton products to a certain extent. In terms of policy, the State also intends to protect Xinjiang cotton through purchasing and storage policies. If sanctions are implemented or the scope of sanctions is expanded, the purchasing and storage efforts are expected to increase. However, the current high price difference between the inside and outside of cotton has caused the purchasing and storage mechanism to initiate a circuit breaker, and there has been no progress in the purchasing and storage activities since December 1. Some market participants who wished to remain anonymous said that the United States has been restricting the use of Xinjiang cotton in imported textiles for some time and has already had a greater impact on the market. It is reported that some large multinational companies have already requested not to use Xinjiang cotton in orders to avoid later uncertainty. This is bound to have a negative impact on cotton consumption in Xinjiang, and this impact will not be eliminated in the short term. It is recommended that companies make preparations as soon as possible.
Looking forward to the future, Wu Xinyang said that currently cotton tends will mostly fluctuate. Supported by the cost of new cotton, the space below is limited. In addition, the pressure on warehouse receipts has not been released. Once the futures price is too high and the basis is suitable, pressure on hedging orders may appear. Coupled with the current decline in cotton textile prices and compression of profits, the downstream has temporarily limited acceptance of Khmer prices. In the long run, the gradual improvement of the macro level has laid the foundation for the recovery of later orders, and it is recommended to buy on dips. “The rush to buy seed cotton in Xinjiang cotton is particularly obvious this year, leading to high seed cotton prices. At present, domestic cotton prices are high, and purchasing and storage cannot be held as scheduled. This has also seriously damaged the competitiveness of downstream textile enterprises. At present, downstream consumption has declined and new cotton sets Insuring pressure increases, and there is greater pressure in the short-term market. However, we are not pessimistic about the long-term cotton price trend. It is recommended that processing companies take advantage of the trend to hedge, and textile companies can increase purchases at low levels.” The above-mentioned market participants said.
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