The 2024 China Cotton Industry Development Summit Forum opened in Xi'an from May 30th to 31st.
The theme of this forum is "Developing New High-Quality Productivity and Promoting Sustainable Cotton Development." Nearly 800 representatives from government departments, cotton industry organizations, cotton merchants, textile enterprises, and brand owners from home and abroad attended the meeting. Participants engaged in in-depth exchanges on topics such as developing new high-quality productivity in the cotton industry, promoting the optimization and upgrading of the industrial chain, and green, low-carbon, and sustainable development, analyzing the industry situation, and conducting trade negotiations.
Optimizing and Strengthening the Entire Cotton Industry Chain
Chen Zuxin, member of the Party group and vice chairman of the board of directors of the All-China Federation of Supply and Marketing Cooperatives, said in his speech that cotton is an important agricultural bulk commodity. The development of the cotton industry is related to people's basic clothing and living needs, as well as the employment and livelihood of many people. To promote high-quality and sustainable development of the cotton industry, it is necessary to optimize and strengthen the entire industrial chain. After years of development, China's cotton industry chain has been continuously optimized, undergoing earth-shaking changes, but there are still many shortcomings and weaknesses. To solve these problems, national policies need to provide guidance, and the entire industry and enterprises need to be based on reality, find their positioning, and exert their efforts precisely to form a synergistic effect; to promote high-quality and sustainable development of the cotton industry, innovation must be vigorously promoted; to promote high-quality and sustainable development of the cotton industry, market stability must be maintained; to promote high-quality and sustainable development of the cotton industry, open cooperation must be adhered to.
Gao Fang, president of the China Cotton Association, delivered a keynote speech entitled "Promoting High-Quality and Sustainable Development of the Cotton Industry with New High-Quality Productivity." She said that as a relatively traditional industry, we urgently need to explore a sustainable development path suitable for ourselves in the wave of development of various new technologies and new business models, and in the competition among many emerging and future industries. The rapid development of China's cotton industry has benefited from repeated transformations of the productivity system, and has become an important industry involving nearly 17 million cotton farmers, textile workers, and related service personnel. China's cotton production, consumption, and textile exports rank first in the world. In the context of the new round of technological revolution and industrial transformation, traditional industries should also be rejuvenated and win the future through digital empowerment and green transformation. It is necessary to continue to liberate and develop productivity, transform technology, products, and scale strength into quality improvement, value creation, and brand building capabilities, and take the development of new high-quality cotton productivity as an important focus to promote high-quality and sustainable development of the industry.
Cotton Futures Safeguard High-Quality Development of the Cotton Industry
China is a major cotton producer, consumer, importer, and exporter of cotton textiles and garments, occupying an important position in the world's cotton raw material and finished product trade.
In 2004, cotton futures were listed on the Zhengzhou Commodity Exchange (hereinafter referred to as the Zhengzhou Exchange). In the past 20 years, the cotton futures market has grown from nothing to a large scale, with its market size steadily expanding and its price discovery function gradually becoming prominent. It has not only provided effective risk management tools for cotton enterprises, but also greatly promoted the modernization of the cotton industry.
Ji Guangpo, chief expert and executive vice general manager of the Shanghai International Cotton Exchange, said that 20 years ago, cotton futures were unknown, but today they have become an indispensable tool for insiders and outsiders of the cotton industry. It has taken a long time, and it embodies the joy and sweat of every participant.
Chen Tao, former chairman of Louis Dreyfus (China), said that cotton futures are no less competitive than any commodity on any international market exchange. Regardless of market size or the further application of options derivatives, it has established a foothold in the international market.
Wei Gangmin, chairman of Henan Tongzhou Cotton Industry Co., Ltd., said that in his 40 years of corporate career, he has always been involved with cotton, especially since he started his own business. Without cotton futures, the company would not have developed to where it is today. From planting to acquisition, processing to cotton trade, to textile weaving and clothing, his company has completed industrial development, and its entire development is inseparable from cotton futures, with in-depth hedging.
Liu Yiming, chairman of Shanghai Digital World Industrial Technology Group Co., Ltd., is a young entrepreneur born in the 1980s with 15 years of management experience in the textile industry. He said that since the listing of cotton futures, textile factories have also changed. They used to be producers, but now they are also traders. For producers, it is important not only to understand professional management and technology, but also to attach importance to the use of cotton futures, because it is very important.
Leading the Entire Market with Continuous Five Years of A-Class Rating
In the roundtable discussion session, relevant personnel from the Zhengzhou Commodity Exchange also shared their observations.
He said that cotton futures are of great significance. The 20-year history of cotton futures development has been exciting, and can be summarized as one system, two major functions, and three services. Up to now, a comprehensive cotton derivatives system has been built, centered on cotton futures, including cotton options, cotton yarn futures, and over-the-counter markets.
The hedging and price risk management functions of cotton futures are good. Up to now, all large and medium-sized ginning enterprises and cotton trading enterprises have participated in cotton futures trading.
Since its listing, the correlation between cotton spot and futures prices has reached 0.95. In the functional assessment of all markets and varieties organized by the China Securities Regulatory Commission, cotton futures have achieved A-class rating for five consecutive years, leading the entire market. For twenty years, we have been committed to serving enterprises, industries, and the national development.
In September 2017, the Zhengzhou Exchange set up 12 delivery warehouses in Xinjiang, in response to the trend of the cotton industry's accelerated transfer to Xinjiang, serving the high-quality development of Xinjiang's cotton industry. A rough estimate shows that 700,000 tons of Xinjiang cotton are hedged and sold through the futures market every year, mainly in the form of registered warehouse receipts.
Since 2016, the Zhengzhou Exchange has carried out 33 cotton "insurance + futures" pilot programs, helping to link poverty alleviation and rural revitalization. At the same time, the Zhengzhou Exchange has built and developed multi-dimensional over-the-counter businesses, such as over-the-counter platform warehouse receipt buyout repurchase business.
The official stated that the Zhengzhou Exchange will continue to optimize the rules and regulations system for cotton, help build new high-quality productivity in the cotton industry chain, and serve the high-quality development of the cotton industry.
It is worth mentioning that this conference is divided into a macro forum—policy and environment, three thematic forums: "Situation Analysis and Outlook," "High-Quality Development and Risk Management of the Cotton Textile Industry," and "International Situation and Outlook," as well as a roundtable forum: "Developing New High-Quality Productivity and Promoting Sustainable Cotton."
In other sessions of the forum, experts from relevant government departments, research institutions, and enterprises also elaborated on the domestic and international economic situation, agricultural policies, macroeconomic regulation, and analyzed the global cotton supply and demand situation and development trends.
