SHANGHAI: China could import more cotton to replace fibre from Xinjiang that’s being rejected by some Western companies and threatens to hurt its booming textile export industry.
The US bans entry of all products containing cotton from Xinjiang, which accounts for over 80 per cent of China’s output, because of concern over the human rights situation in the region. Hennes & Mauritz AB, Nike Inc and Adidas AG have become ensnared in the row, drawing consumer ire in China for pledges not to use cotton from the area, a major supplier in the global supply chain, report agencies.“The only option right now may be to increase cotton imports as export orders for some textile mills will suffer if they use local fibre,” said Xu Yaguang, an analyst with Huatai Futures. Mr Xu sees so-called extra cotton import quotas this year returning to the 2019 level of 800,000 tons with an increased requirement for high-quality fibre. The government issued 400,000 tons of extra quotas in 2020, and has not so far issued any for 2021.
Consumption of Xinjiang cotton could drop by as much as 20 per cent as the export outlook for products containing cotton from the region is not very bright, said Wu Faxin, a veteran cotton trader with industry portal shaxianbao.cn. Mr Wu expects exporting countries such as Brazil and those in Africa to benefit from the additional demand.
Wu Yan, head of the Better Cotton Initiative (BCI) in China, told state television the decision by its headquarters to cut ties with Xinjiang growers will block about 500,000 tons of fibre from the region from entering the global supply chain. The group in China said it has not found any forced labour in Xinjiang since 2012. Members include world retailers and brands such as H&M and Nike.